GIFT   OF 
MICHAEL  REE&E 


MANUAL 

OF  REFERENCES  AND  EXERCISES 
IN  ECONOMICS 


•  MANUAL 

OF  REFERENCES  AND  EXERCISES 
IN  ECONOMICS 


FOR  USE  WITH 

VOLUME  II.  MODERN  ECONOMIC  PROBLEMS 


BY 

FRANK  A.  FETTER,  PH.D.,  LL.D. 
>» 

PROFESSOR  OF  ECONOMICS,   PRINCETON  UNIVERSITY 


NEW  YORK 

THE  CENTURY  CO. 

1917 


FOREWORD 

This  Manual  follows  the  lines  of  the  "Manual  of  References  and 
Exercises,"  published  in  the  autumn  of  1916,  to  accompany  the  volume 
on  Economic  Principles. 

The  literature  of  the  field  treated  in  "Modern  Economic  Problems" 
is  now  so  vast  that  no  more  than  a  few  of  the  titles  could  be  included 
in  the  following  lists.  The  references  given  are  usually  the  more 
recent  of  those  that  would  be  helpful  to  students  desiring  to  go  more 
deeply  into  the  subjects. 

The  collection  of  questions  and  exercises  is  based  upon  the  list 
printed,  first  in  1904  and  much  enlarged  in  1910,  in  the  author's 
"Principles  of  Economics."  Much  material  has  been  added  that  had 
been  shaped  and  used  in  class  work  at  Princeton  University,  and  a 
few  other  problems  have  been  drawn  from,  or  suggested  by,  other 
published  lists.  The  plan  of  indicating  the  original  sources  of  a  num- 
ber of  these  questions  has  been  found  to  be  too  difficult  to  be  com- 
pleted for  the  present  edition.  Indeed,  it  appears  that  numerous  test 
problems  have  become  a  common  heritage  for  economic  teachers,  and 
one  can  hardly  be  sure  when  one  has  traced  the  ideas  to  their  original 
sources.  Some  of  them  have  appeared  in  somewhat  differing  forms  in 
various  lists  for  a  half  century  past. 

Particular  acknowledgment  is  made  to  my  colleagues,  Professors 
Adriance  and  McCabe,  who  devised  a  number  of  the  questions  for  class 
use;  and  to  Dr.  Stanley  E.  Howard,  who  has  given  most  valuable  aid 
in  the  preparation  of  this  Manual  in  its  present  form. 

F.  A.  .F 

Princeton,  N.  J.,  February,  1917. 


MANUAL 


OF  REFERENCES  AND  EXERCISES 
IN  ECONOMICS 


MANUAL 


OF  REFERENCES  AND  EXERCISES 
IN  ECONOMICS 

CHAPTER  1 
MATERIAL  RESOURCES  OF  THE  NATION 

REFERENCES.  (Those  marked  with  an  asterisk  (*)  are  the  shorter 
assignments  that  are  most  applicable.) 

Adams,  G.  C.,  Commercial  geography.       1906. 

Marsh,  G.  P.,  Man  and  nature:  or  physical  geography  as  modified 
by  human  action.  1864.  (Later  editions  under  the  title,  "The 
earth  as  modified  by  human  action.") 

*Materials,  58-61  (Extract  from  Mason,  0.  T.,  Technogeography,  or 
the  relation  of  the  earth  to  the  industries  of  mankind.  Ameri- 
can Anthropologist,  7:  135-158.  1905);  61-66  (extract  from  Sem- 
ple,  E.  C.,  Influence  of  geographic  environment.  1911.) 

Smith,  J.  R.,  Industrial  and  commercial  geography,  1913. 

*  Source  Book,  292-302  (extract  from)  ;  Daniels,  W.  M.,  Economic 
causes  as  affecting  the  political  history  of  the  United  States. 
Accountants'  Magazine,  May,  1907. 

Teele,  R.  P.,  Irrigation  in  the  United  States.     1915. 

Trotter,  $.,  the  geography  of  commerce.     1903. 

United  States  Census,  1910.     Volume  on  wealth,  debt,  and  taxation. 

Van  Hise,  C.  R.,  Conservation  of  natural  resources.     1910. 

QUESTIONS. 

1.  What   relation   can   be   observed   between    general   industrial   con- 
ditions  and   the   per   capita   wealth?      Between    the   character    of    the 
people   and  the   per   capita   wealth?      Can   countries   be   grouped   geo- 
graphically according  to  per  capita  wealth? 

2.  How  does  the  United  States  compare  with  other  countries  with 
respect    to    the    estimated    amounts    and    values    of    cereal    products? 
Textile  fibres?     Coal?     Iron  and  copper  ore?     Present  the  results  of 
your  study  in  tabular  form. 

3.  From  the  reports  of  the  Thirteenth  Census  prepare  a  statement 


10  MANUAL  OF  REFERENCES 

in  tabular  form  showing  the  geographical  distribution  of  our  chief 
dome.-fic  aouixes  oC  s-ujplv  of  the  leading  cereals,  .of  neat  cattle,  of 
textile  fibres,  of  coal,  iron  ore  and  copper  ore,  and  of  water  power. 

4.  What   physical   conditions   account   for   the   greatness   of   ancient 
Egypt,  of  Venice,  of  Holland,  of  England,  of  the  United  States? 

5.  Has  the  isothermal  line  any  relation  to  the  number  of  million- 
aires? 

CHAPTER  2 
THE  PRESENT  ECONOMIC  SYSTEM 

REFERENCES. 

Cooley,  C.  H.,  Human  nature  and  the  social  order.     1902. 

Cooley,  C.  H.,  Personal  competition.  Amer.  Econ.  Assn.,  Econ. 
Studies,  4:  78-173.  1899. 

*Ely,  R.  T.,  Competition:  its  nature,  its  permanency,  and  its  benefi- 
cence. A.  E.  Assn.  Pubs.,  3d  ser.,  2:  55-70.  1901. 

Ely,  R.  T.,  Evolution  of  industrial  society.     1903. 

Ely,  R.  T.,  Property  and  contract  in  their  relation  to  the  distribu- 
tion of  wealth.  1914.  (2  vols.) 

Giddings,  F.  H.,  The  economic  ages.     P.  S.  Q.,  16:  193-221.     1901. 

*Gray,  John  H.,  Economics  and  the  law.  A.  E.  Rev.,  5  (no.  1, 
supp.)  :  3-23.  1914. 

Ririley,  David,  The  renewed  extension  of  government  control  of 
economic  life.  A.  E.  Rev.,  4  (no.  1,  supp.)  :  3-17.  1914. 

Schmoller,  Qustav,  The  mercantile  system.     Trans,  by  Ashley,  1896. 

QUESTIONS. 

1.  State  briefly  and  criticize  the  theories  of  the  origin   of  private 
property. 

2.  What  have  been  the  theories  put  forward  to  justify  the  system 
of  private  property  in  the  past? 

3.  Under  private  property,  can  men  complain  of  the  use  made  by 
others  of  their  wealth  on  the  ground  merely  that  it  was  unwise? 

4.  What   are  the   recognized  limitations  upon   the  right  of  private 
property?     Are   these    limitations    in   opposition    to   the   principle   by 
which  private  property  is  now  generally  defended? 

5.  Is  the  right  of  bequest  a  necessary  condition  of  private  property? 

6.  Do  you  know   of  any   father   who   created   more  wealth   because 
he  could  bequeath  it  to  his  son? 

7.  Does  the  son  work  as  hard  when  he  inherits  his  father's  wealth? 

8.  What  is  the  effect  of  private  property  on  saving? 

9.  What  is  meant  by  the  "Factory  System." 

10.  Through  what  historic  stages  has  production  passed? 


AND  EXERCISES  IN  ECONOMICS  11 

CHAPTER  3 
NATURE,  USE  AND  COINAGE  OF  MONEY 

REFERENCES. 

Jevons,  W.  8.,  Money  and  the  mechanism  of  exchange.     1875.     Chs. 

III-VII,  XIII. 

*Johnson,  J.  F.,  Money  and  currency.     1905.     Chs.  I,  II,  IX. 
*  Phillips,    C.    A.    (Ed.),    Readings    in    money    and    banking.      1916. 

Chs.  i-ni,  xiv. 

Walker,  F.  A.,  Money  in  its  relations  to  trade  and  industry.    1st  ed. 
1879.     Chs.  I,  II. 

White,  Horace,  Money  and  banking  illustrated  by  American  history. 
Ed.  1914.  Bk.  I. 

QUESTIONS. 

1.  What  are  the  qualities  of  metallic  money? 

2.  What  is  the  difficulty  in  deciding  whether  to  call  the  following 
money:  gold  ingots,  gold  coin,  silver  dollars,  copper  cents,  greenbacks, 
bank-checks,  chalk-marks  to  keep  account? 

3.  Who  makes  coins?     Would  jewelers  make  better  ones? 

4.  What  are  the  advantages  and  disadvantages  of  a  seigniorage  tax? 


CHAPTER  4 
THE  VALUE  OF  MONEY 

REFERENCES. 

Fisher,  Irving,  The  purchasing  power  of  money.     1911. 

Gibson,  Thomas,  Special  market  letters  on  the  increasing  gold  sup- 
ply and  its  effect  on  security  values;  interest  rates;  commodity 
prices,  etc.  1908. 

*Johnson,  chs.  Ill- VIII,  X. 

Kemmerer,  E.  W.,  Money  and  credit  instruments  in  their  relation 
to  general  prices.  2d  ed.  1909. 

Magee,  J.  D.,  Money  and  prices.  J.  P.  E.,  21:681-711,  798-818. 
1913. 

"Phillips,  chs.  VIII,  XI. 

Round  table  discussion,  Money  and  prices.  A.  E.  Assn.  Bui.,  4th 
ser.,  1  (no.  2)  :  46-70.  1911. 


12  MANUAL  OF  REFERENCES 

*  Source  Book,  303-313.      (Extract  from  report  of  the  Secretary  of 

the  Treasury,  1911.) 

United  States  Secretary  of  the  Treasury,  Finance  report,   1911. 
Walker,  F.  A.,  chs.  IV,  V. 

QUESTIONS. 

1.  What  are  the  functions  of  money? 

2.  What  are  the  principal  things  besides  money  uses  that  cause  a 
demand  for  gold  and  silver. 

3.  Why   do  you   value  money?     Do   you   value   it  more   than   the 
things   it   buys  ? 

4.  When  goods  are  exchanged  for  money  or  money  for  goods,  what 
is  the  gain? 

5.  If  money  is  a  tool,  what  does  it  make? 

6.  When  gold  comes  out  of  the  mine  is  the  gain  to  the  community 
greater  or  less  than  when  the  same  value  of  grain  is  harvested? 

7.  Are  men  wealthy  in  proportion  to  the  money  they  have?     Are 
countries  ? 

8.  Would    a   nation    be   poorer,    if,    like    Sparta,    it   prohibited    all 
money  ? 

9.  Is  a  community  poor  because  it  has  little  money  in  circulation 
or  does  it  have  little  money  in  circulation  because  it  is  poor? 

10.  Could  a  country  better  do  without  money,  horses,  or  roads? 

11.  Why  does  nearly  all  the  gold  produced  in  California  leave  the 
state?     What  keeps  any  of  it  there? 

12.  The  mint  price  of  an  ounce  of  gold,  .900  fine,  is  alike  at  San 
Francisco  and  Philadelphia,  $18.604.     Why  is  gold  ever  shipped  from 
California  to  New  York? 

13.  Does  gold  cost  the  day-laborer  as  much  in  California  as  in  New 
York? 

14.  Note  any  habits  of  friends  that  result  in  their  carrying  more 
or  less  money  than  others  of  the  same  income. 

15.  What  determines  the  amount  of  money  needed  by  different  per- 
sons, towns,   states,  and  nations? 

16.  Give  examples  of  things  that  increase  the  demand  for  money. 

17.  On  an  isolated  island  would  it  make  any  difference  as  to  the 
value  of  money  if  there  were  but  one  gold-mine  or  several  competing 
ones,  supposing  that  the  output  were  the  same? 

18.  What  per  cent,  of  the  total  money  in  the  world  is  the  yearly  out- 
put of  gold;   of  silver;   of  gold  and  silver?     Stat.  Abst. 

19.  Is   the  value  of   gold  and   silver   due  to  the   action   of  govern- 
ment? 


AND  EXERCISES  IN  ECONOMICS  13 

20.  In  what  ways  may  the  government  determine  the  value  of  the 
monetary  standard? 

21.  If  all  the  different  denominations  of   media   of   exchange  were 
doubled   in  number,   exchanges  remaining  unchanged,  what  would  be 
the  effect  upon  prices? 

22.  Is  it  true  of  all  commodities  that  changes  in  supply  affect  their 
value  proportionally?     Is  it  true  of  money?     If  in  your  opinion  there 
is  any  difference,  explain  it. 

23.  If  the  amount  of  coal  in  a  country  should  be  increased  twenty- 
five  per  cent.,  in  what  percentage  would  you  expect  the  value  of  coal 
to  change?    Give  reasons.    If  the  amount  of  money  in  a  country  should 
be   increased    twenty-five    per    cent.,    in    what    direction    and   in    what 
percentage  would  the  value  of  money  change?    Give  reasons.     (In  each 
case  the  condition  is  "other  things  being  equal.") 

24.  If  in  a  given  community  all  watch  cases  were  made  of  gold,  and 
each   case  contained   one  ounce  of  gold,  would  you  expect  the  value 
of  watch   cases   to   fall  by   exactly  one-half  if  the  number   of  watch 
cases  in  the  community  were  doubled,  all  other  things  remaining  the 
same?      If    in   another    community    (at   another    time)    all   exchanges 
were  made  exclusively  by  the  use  of  gold  coins,   each  containing  an 
ounce   of  pure  gold,  would  you   expect  that   prices   in  general  would 
be  exactly  doubled  in  case  no  change  occurred  in  the  community  ex- 
cept a  doubling  of  the  number  of  coins  in  circulation? 

25.  Why    might    an    increased    resort   to   barter    produce    upon    the 
general  level  of  money  prices  effects  similar  to  those  produced  by  an 
increased  use  of  credit  media  of  exchange? 

26.  What  gives  rise  to  the  belief  sometimes  held  that  money  is  an 
invariable  standard  of  value? 

27.  Define    depreciation    and    appreciation    of    the    currency.      What 
causes  may  produce  either?     What   are  the  effects   of  either?     More 
generally,  what  determines  the  value  of  the  currency? 

28.  If  gold  were  to  become  as  plentiful  as  iron,  would  it  be  worth 
more  or  less  than   iron? 

29.  A  nation  having  no  foreign  trade  had  originally  in  circulation 
1,000,000   coins,    each   called   a  florin,   and   each   containing   an   ounce 
of  pure  metal.     To  this  original  coin  circulation  the  government  adds 
500,000  florins  each  containing  one-half  ounce  of  pure  metal,  and  at 
the  same  time  the  government  adds  to  the  circulation  600,000  florins 
in  the  shape  of  inconvertible  paper.     Both  the  half  ounce  florin  and 
the  paper  florin  are  by  law  made  legal  tender  for  a  full  weight  florin. 
In  the  absence  of  any  tendency  to  discriminate  between  accepting  dif- 
ferent kinds  of  florins  in  domestic  trade,  and  with  no  other  changes 


14  MANUAL  OF  REFERENCES 

in  the  money  situation  except  such  as  are  necessitated  by  the  afore- 
said additions  to  the  circulating  medium,  tell,  first,  what  ultimately 
will  be  the  number  of  florins  in  circulation,  and  give  your  reasons;  and 
tell,  second,  of  what  kinds  of  florins  and  in  what  proportions  the  ulti- 
mate circulating  medium  will  be  composed. 

30.  Assume   a   country   using   gold   alone   as   money   and   having   in 
circulation    2,000,000   coins,   under   a   system   of   free   coinage.     What 
would  be  the  effect  of  closing  the  mints  and   issuing   1,500,000   new 
coins   containing  nine-tenths   as   much  gold  as   the   coins   above  men- 
tioned,   assuming   that   the   number   of   goods   exchanged   remains   the 
same?      Explain    clearly.      What   is   the   total   quantity   of   such    new 
coins    the   government   can    issue    and   keep    in    circulation?      Explain 
clearly. 

31.  A  country  using  gold  money  as  its   sole  medium   of  exchange, 
under   free   and  gratuitous   coinage,   makes   the   following   change:    it 
imposes  a  seigniorage  charge  of  ten  per  cent.,  but  without  giving  up 
free  coinage  or  reducing  the  amount  of  fine  gold  in  the  coin.     To  what 
extent  and  in  what  direction  will  the  value  of  money  change,  if  at  all 

(a)  if  the  number  of  goods  exchanged  gradually  increases 
five  percent.; 

(b)  if  the  number  of  goods  exchanged  gradually  increases 
twenty-five  percent.? 

Give  your  reasons  clearly. 


CHAPTER  5       . 
FIDUCIARY  MONEY,  METAL  AND  PAPER 

REFERENCES. 

*Jevons,  chs.  VIII,  XVII,  XVIII. 

*  Johnson,  chs.  XIII-XVI. 

Kemmerer,  E.  W.,  Modern  currency  reforms.     1916. 

*  Phillips,  chs.   IV,  V,  XII. 

United  States  Director  of  the  Mint,  Annual  reports. 
Walker,  chs.  VIII-XII. 
White,  Bk.  II,  chs.  Ill- VI. 

QUESTIONS. 

1.  When  5160  grains  of  standard  gold  (i.e.,  by  weight  nine-tenths 
fine,  with  the  other  tenth  composed  of  the  alloy  used  in  gold  coin 
of  the  United  States)  sell  in  New  York  for  $201.25  has  the  money 
"saturation  point"  been  reached  or  exceeded,  and  will  bullion  be  taken 
to  the  mint  or  coin  melted  down  or  exported? 


AND  EXERCISES  IN  ECONOMICS  15 

2.  Define  legal-tender  as  applied  to  money.     What  is  meant  by  fiat 
money  ? 

3.  Is  a  United  States  standard  silver  dollar  commodity  or  fiduciary 
money?     What  determines  its  value?     Of  what  importance  is  its  legal 
tender  quality? 

4.  Is  the  provision  of  law  whereby  the  fractional   silver  coins  of 
the  United   States   are  of   less  proportionate   silver   content  than   the 
standard    silver   dollar   necessary    to-day?      Is   it   useful?      Give   your 
reasons. 

5.  Under  what  conditions  will  "bad  money"  fail  to  displace  "good 
money"  from  circulation? 

6.  Under  what  circumstances  will  money  that  is  not  in  fact  con- 
vertible  into   other   money   have   greater   value   than   the   material   of 
which   it    (the   first   mentioned   money)    is  made?     Give   an    example 
from  the  monetary  experience  of  the  United  States. 

7.  In  a  country  which  has  hitherto  had  free  and  gratuitous  coin- 
age of  gold,   the  government   institutes   a   seigniorage   charge   of   five 
per  cent,  by  reducing  to  that  extent  the  amount  of  gold  put  into  each 
coin;  the  gold  withheld  by  the  government  is  not  coined.     What  will 
be  the  effect  of  this  seigniorage  charge  upon  (a)  prices  in  that  country, 
(b)    the  comparative  value  of  the  gold  in  a  new  coin  and  the  same 
weight  of  uncoined  gold?    Make  your  reasoning  clear. 

8.  If   a   nation's   entire   money   circulation   consisting   of    1,000,000 
coins,  all  of  them  debased  by  a  seigniorage  charge  of  50  per  cent.,  were 
at  once  increased  by  the  government's  putting  into  circulation  300,000 
pieces  of  inconvertible  paper  money,  each  piece  of  the  same  demonina- 
tion  as  each  coin,  what  effects  might  be  anticipated  on  the  basis  of 
Gresham's  law  or  otherwise,  it  being  presupposed  that  the  full  amount 
of  full  weight  coin  required  to  conduct  the  nation's  exchanges  is  only 
900,000?     Give  your  reasons. 

9.  A   certain    island   has   no    silver    mines    and    no    foreign    trade. 
It   effects   all   its   exchanges  by   the   actual   use   of   silver   coin   whose 
coinage  is  free  and  gratuitous.     It  has  no  banks,  and  does  not  resort 
either  to  barter  or  to  credit.     Silver  is  also  used  in  the  shape  of  plate 
in  the  island.    Originally  it  had  100,000  silver  coins  in  circulation,  each 
containing  one  ounce  of  pure  silver.     After  a  certain  date,   as  these 
coins  were  paid  into  the  government  treasury  for  taxes,  at  the  rate 
of   5,000   one-ounce  coins  per   week,  the  one-ounce   coins  were  melted 
and  the  resulting  bullion  was  recast,  each  new  coin  weighing  2  ounces 
and  bearing  the  same  name  as  the  original  one-ounce  coins.  Thereafter 
all  coins  struck  at  the  island  Mint  contained  two  ounces  of  silver,  and 
at  that   standard  coinage  continued  free  and  gratuitous.     When  the 


16  MANUAL  OF  REFERENCES 

government  first  pays  out  the  new  2-ounce  pieces,  will  they  remain  in 
circulation  with  the  old  one-ounce  coins  and  have  the  same  purchasing 
power?  Give  reasons. 

10.  If  the  above-described  process  of  reminting  5,000  one-ounce  coins 
per  week  continues  for  twelve  weeks  and  then  stops,  how  many  old 
and  how  many  new  coins  will  at  the  end  of  the  twelfth  week  be  in 
circulation  ?     Reasons. 

11.  The  government  of  the  island  of  Guernsey  having  no  money,  is- 
sued paper-notes  to  pay  for  the  building  of  a  market.     They  circu- 
lated  and   were   gradually  taken   up   as  the   market   earned   its   cost, 
during   ten   years.      When   they   were    all   redeemed    and   burned,   the 
island  had  the  market  free  of  cost.     Explain  how  this  could  be  done. 
(From  Sumner's  Problems  in  political  economy.) 

12.  Suppose   a   nation   has    1,000,000,000   gold   coins,   each   weighing 
one  ounce    (Troy)    as  its  only  circulating  medium.     Suppose  that  the 
government   enacts   that   henceforth   coins  will   be   uttered   containing 
only  99  per  cent,   as  much   pure  gold  as  heretofore,   the  government 
taking  one  per  cent,  for  its  own  use. 

Suppose  "other  things  remain  the  same."  What  effect  will  this 
action  have  on  the  number  of  coins  circulating? 

Will  prices  be  affected? 

Now  suppose  the  demand  for  money  increases.  Will  bullion  owners 
bring  their  bullion  to  the  mint  for  coinage? 

Suppose  this  government  had  continued  to  utter  coins  of  the  same 
weight  and  fineness  as  before,  but  had  kept  back  one  per  cent,  of  the 
bullion  brought  to  the  mint  for  its  own  use.  Answer  these  three 
questions  in  the  light  of  this  supposition. 

13.  Tabulate   the   index   numbers,   the  greenback   price   of  the  gold 
dollar,  and  the  gold  price  of  the  greenback  dollar,  from  1861  to  1879. 

14.  Show  the  difference  between  convertible  and  inconvertible  money. 

15.  Contrast   the  position   of   the   commodity  money   theorists   with 
that  of  the  fiat  money  theorists. 

16.  In  a  gold-standard  country,  one-half  of  whose  monetary  circula- 
tion consists  of  silver  dollars   (which  are  unlimited  legal  tender)    and 
of  silver  certificates  payable  on   demand  in   silver  dollars    (and   sup- 
ported   dollar    for    dollar    by    silver    dollars    in    reserve),    and   whose 
mints  are  closed  to  the  free  coinage  of  silver,  how  would  the  money 
value   of  the   silver   dollars   and   silver   certificates  be   affected   if  the 
gold  price  of  silver  should  fall    (1)    10  per  cent.?      (2)    50  per  cent? 
(3)    5   per    cent.?     How   would   it   be   affected    if   the   value   of   gold 
should  fall  10  per  cent?     (Free  coinage  of  gold  is  assumed).     Explain 
the  principles  involved  in  your  answer. 


AND  EXERCISES  IN  ECONOMICS  17 

CHAPTER  6 
THE  STANDARD  OF  DEFERRED  PAYMENTS 

REFERENCES. 

Fisher,    Irving,    Appreciation    and    interest.      A.    E.    Assn.    Pubs., 

11:331-442.     1896. 
Fisher,  Irving,  A  remedy  for  the  rising  cost  of  living — standardizing 

the  dollar.     A.    E.   Rev.,   3  (no.    1,   supp.)  :  20-28.      1913.     Round 

table  discussion  of  above,  29-51. 
Fisher,  Irving,  Objections  to  a  compensated  dollar  answered.     A.  E. 

Rev.,  4:  818-839.     1914. 
*Jevons,  ch.  XXV. 

*  Johnson,  chs.  XI,  XII,  XVII. 

Kinley,  David,  Objections  to  a  monetary  standard  based  on  index 
numbers.     A.  E.  Rev.,  3:  1-19.     1913. 

*  Materials,  787,  788  (extract  from  Brown,  H.  <?.,),  788,  789  (extract 

from  Clark,  W.  E.,  in  "How  to   invest  when  prices  are  rising." 

1912). 

Noyes,  A.  D.,  Forty  years  of  American  finance.     1909.     Chs.  I-III. 
Patterson,  E.  M.,  Objections  to  a  compensated  dollar.     A.  E.  Rev., 

3:863-874.     1913. 
*Phillips,  chs.  VI,  VII,  XIII. 
Taussig,    F.    W.,    The   plan    for    a   compensated    dollar.      Q.    J.    E., 

27:401-416.     1912-1913. 

United  States  Bureau  of  Labor  Statistics,  Bui.  173.     1915. 
Walker,  chs.  Ill,  VI,  VII. 

QUESTIONS. 

1.  In  which  year  between  1890  and  the  present  year  would  a  fixed 
salary  of  $1,000  have  gone  farthest?    In  which  year  would  its  purchas- 
ing power  have  been  least?     If  a  sum  of  $1,000  loaned  in  1897  was 
returned   in   1902,  what  was  the   difference   in   its   purchasing   power 
on  its  return  and  when  it  was  loaned? 

2.  Will  a  day's  work  of  A  common  laborer  buy  more  to-day  than 
it  would  a  half  century  ago?     Why? 

3.  The  Bureau  of  Labor's  index  number  for  1912  was  133.     What 
was  the  percentage  change  in  the  value  of  money  from  the  base  period 
to  1912?     Give  your  reasons  and  your  work. 


18  MANUAL  OF  REFERENCES 

4.  Average  prices  for 

years  1860-65.       Prices  for  1900. 

Coffee,  Ib $  .12  $  .18 

Coal,  ton 3.00  3.60 

Sugar,  Ib 08  .06 

Wool  Ib 30  .20 

Wheat,  bu 80  .90 

Upon  the  basis  of  the  prices  of  the  above  commodities  estimate  the 
general  price  level  for  1900,  showing  the  percentage  of  its  decline  or 
advance  from  the  basal  price  level.  Indicate  some  of  the  causes  which 
may  have  brought  about  this  decline  or  advance. 

5.  At    a    given    time    the    following    commodity    prices    prevailed: 
cotton   (raw),  $.10  per  Ib. ;  wheat,  $1.00  per  bu. ;  sugar,  $.07  per  Ib. ; 
potatoes,  $1.00  per  bu.;  beef   (for  roasting),  $.25  per  Ib.;  shoes,  $5.00 
per  pair;  cotton  cloth  of  a  standard  grade,  $.12  per  yd.;  woolen  cloth 
of  a  standard  grade,  $1.25  per  yd.;  men's  hats,  $4.00,  and  coal,  $7.00 
per  ton. 

At  a  later  date  the  prices  of  the  same  commodities  were  respectively 
as  follows:  $.13,  $1.05,  $.06,  $1.10,  $.30,  $5.75,  $.15,  $1.20,  $4.50 
and  $6.50. 

Tabulate  these  facts  and  compute  index  numbers,  which  will  show: 

( 1 )  changes  in  the  price  level  of  all  ten  commodities. 

(2)  changes  in  the  price  level  of  the  articles  of  food. 

(3)  changes  in  the  price  level  of  the  articles  of  clothing. 

6.  In  the  preceding  exercise,  do  the  data  afford  sufficient  grounds 
for  saying  that  the  cost  of  living  has  moved  either  upward  or  down- 
ward ? 

If  an  affirmative  answer  be  assumed,  what  has  been  the  change  in 
the  value  of  money? 

7.  Assign    to    each    of    the    commodities    listed    above    a    "weight" 
which    represents,    in   your    opinion,    its    importance   as   an    article   of 
popular   consumption.     Using  this   system   of   weights   compute   index 
numbers  to  show  changes  in  the  price  levels  of  the  same  groups  of  com- 
modities. How  does  the  weighting  affect  your  first  conclusions  regarding 
the  changes  in  the  cost  of  living.    What  is  the  importance  of  a  system 
of  weighting? 

8.  If   the  world's   annual   production   of  gold   should   suddenly   in- 
crease five-fold,  what  would  be  the  probable  effect:   upon  the  welfare 
of   a   stock  exchange   speculator   as   compared   with   the  welfare   of   a 
teacher;  upon  the  welfare  of  the  creditor  class  as  compared  with  that 
of  the  debtor  class;   upon  prices? 

9.  What  is  the  function   of  the   standard   of   deferred   payments? 


AND  EXERCISES  IN  ECONOMICS  19 

What  is  that  standard  now  in  America?    What  change  in  it  has  lately 
been  going  on?     How  is  this  affecting  the  incomes  of  various  classes? 

10.  What   ought   to   be    the   characteristics    of    a    standard    unit   of 
value  ? 

11.  Can  you  get  a  kind  of  money  that  will  make  the  things  that  are 
sold,  dearer,  and  the  things  that  are  bought,  cheaper? 

12.  Is  the  fact  of  one  man's  gain  and  another  man's  loss  by  chance 
of  any  economic  or  political  importance? 

13.  If   every  piece  of  money  should  miraculously  be  doubled   in   a 
night,  whose  interests  would  be  affected? 

14.  Compare  the  effect  of  an  increasing  gold  output  upon  the  price 
of  outstanding  bonds  with  its  effect  upon  the  price  of  common  stock 
already  issued. 

15.  X   is   an   isolated   industrial   country  with   a  certain  volume  of 
money.     Its  government  on  a  given  day  doubles  the  amount  of  cur- 
rency.    What  will  be  the  effect  upon  the  rate  of  interest. 

(a)  of  long-time  loans, 

(b)  of  short-time  loans,  and 

(c)  of  demand  loans? 

16.  The    rate    of    interest    on    long-time    investments    in    a    certain 
isolated  community  has  been  six  per  cent.     The  amount  of  money  in 
this  community  is  increased  so  as  to  raise  the  general  level  of  prices 
by    100   per   cent.      Assuming   that   the    increase    in   money   has   come 
wholly  from  the  more  copious  output  of  money-metal  from  the  mines, 
to  what  extent  will  this  rise  in  the  general  level  of  prices  affect  the 
rate  of  interest  when  thereafter  capital  is  loaned  for  long-time  periods? 

17.  Could   a   railway   in   the  United   States   advantageously   float   a 
large  issue  of  20-year  bonds  in  the  year  1916?     Give  reasons  for  your 
answer.     Show  clearly  what  you  mean  by  "advantageously."     Would 
a  railroad  wish  to  float  such  an  issue  if  it  could?     Why? 

IS.  Is  there  anything  in  the  nature  of  mining  that  keeps  the  ratio 
of  the  supply  of  gold  and  silver  nearly  uniform? 

19.  Some  say  Providence  has  indicated  gold  and  silver  as  the  ma- 
terials for  money.     How  has  this  been  done? 

20.  What  are  the  main  reasons  given  for  the  ratio  of  16  to  1  ? 

21.  Does  the  principle  of  the  substitution  of  goods  have  any  bearing 
on  the  value  of  metals  under  bimetallism? 

22.  What  is  the  theory  of  money  held  by  bimetallists  ? 

23.  "Inasmuch    as   gold    (before    1848)    was   more   valuable   on    the 
world's  market  than  at  the  French  mint,  relatively  to  silver,  it  was 
impossible  that  gold  should  circulate  in  France."     Is  this  a  necessary 
conclusion  ? 


20  MANUAL  OF  REFERENCES 

24.  What  arguments  advanced  in  favor  of  bimetallism  in   1896  are 
inapplicable  to-day? 

25.  What  is  the  extent  of  the  influence  one  nation  can  have  on  the 
ratio  of  the  two  precious  metals? 

26.  How  would  the  adoption  of  international  bimetallism  to-day  at 
the   ratio   of    32    to    1    affect    (a)    the    circulating   medium,    (b)    the 
standard   of   value  in   different   countries?     Consider   both   the   imme- 
diate and  the  eventual  results. 

27.  What  would  have  happened  if  a  free  silver  law  had  been  enacted 
in  the  United  States  in  1900? 

28.  Would  an   ideal  monetary  standard   always   measure  the   same 
quantity  of  goods? 

29.  A  owes   B   a  long  term  debt,   which  falls   due  just  before  the 
commencement  of  a  commercial  crisis;   would  it  be  to  the  advantage 
or  disadvantage  of  A  if  the  contract  called  for  payment  in  terms  of  a 
tabular  standard? 

30.  Whjr  has  not  the  tabular  standard  of  deferred  payments  come 
into  common  use?     Is  the  tabular  standard  sound  or  unsound  in  prin- 
ciple?    Would  your  answer  apply  to  the  labor  standard? 


CHAPTER  7 
THE  FUNCTIONS  OF  BANKS 

REFERENCES. 

Cleveland,  F.  A.,  Funds  and  their  uses.     1902. 

Conant,  C.  A.,  History  of  modern  banks  of  issue.     5th  ed.,  1915. 

Dunbar,  C.  F.,  Theory  and  history  of  banking.     2d  ed.,  1901. 

Fisk,  A.  K.,  The  modern  bank.     1903. 

Holdsworth,  J.  T.,  Money  and  banking.     1914. 

Kiriley,  David,  The  specie  reserve  in  a  banking  system.     J.   P.  E., 

20:  12-24.     1912. 
"Phillips,  chs.  IX,  X. 

Scott,  W.  A.,  Money  and  banking.     1903. 
Veblen,  T.,  Theory  of  business  enterprise.     1904. 
*WUte,  bk.  Ill,  chs.  MIL 

QUESTIONS. 

1.  What  does  a  bank  do  for  a  community? 

2.  What  are  the  functions  performed  by  a  bank? 

3.  What  are  the  sources  of  income  to  a  bank? 

4.  Explain  the  most  important  ways  in  which  the  deposits  of  com- 


AND  EXERCISES  IN  ECONOMICS  21 

mercial  banks  originate;   and  state  which  of  these  ways  creates  the 
greatest  amount  of  demand  liabilities  of  the  banks. 

5.  Do  all  banks  issue  notes  ?    Why  ? 

6.  What  is  the  advantage  to  a  bank  of  the  right   to  issue  bank 
notes  ? 

7.  How   does   the   issue   of  bank   notes  differ   from  the   lending  of 
funds  to  depositors? 

8.  Can  a  bank  that  issues  its  own  notes  afford  to  lend  cheaper  than 
the  ordinary  capitalist? 

9.  Two   men   A   and   B   have   notes   each   for   $1000   discounted   at 
the  same  bank.     A  is  credited  on  the  bank's  books  with  the  right  to 
draw  $950.     B  receives  $950  in  the  circulating  notes  issued  by  this 
bank.     Are  the  bank's  liabilities  increased  to  precisely  the  same  extent 
by  the  two  transactons?     Does  either  transaction  immediately  lessen 
the  bank's  cash  reserve? 

10.  The  following  are  the  items  of  a  report  of  a  National  Bank: 
Capital    stock,    $50,000;    Cash    on    hand    and    in    banks,    $77,066.21; 
Circulation,  $49,400;   Bills  payable,  $10,000;  United  States  and  other 
bonds,    $239,050;    Deposits,    $465,417.41;    Surplus    and    net    undivided 
profits,  $30,952.58;  Loans  and  investments,  $289,653.78. 

(a)  Separate  and  arrange  these  items  in  accordance  with  a  regular 
bank  statement  and  prove  your  answer. 

(b)  Show  how   these   items   illustrate   the  essential   functions   of   a 
bank,  explaining  in  detail  the  nature  of  these  functions. 

11.  Sort  out  from  the  following  items  the  resources  and  liabilities 
and  show  the  equality  of  total  resources  arid  total  liabilities: 

Unpaid  dividends $  782.00 

Reserved  for  payment  of  taxes  due 10,000.00 

Undivided    profits .        85,228.57 

Capital  stock    500,000.00 

Surplus  fund    250,000.00 

Cash  items   (checks  to  be  presented  for  settlement  in  next 

day's  exchanges)    280,347.43 

Loans    and   discounts 2,782,713.15 

U.  S.  legal  tender  notes  and  notes  of  national  banks 435,296.00 

Specie   278,304.48 

Deposits    4,057,934.61 

Overdrafts    (checks  paid  in  excess  of  deposits) 2,842.10 

Due  from  banks  and  bankers 370,142.02 

Real  estate 43,900.00 

Mortgage   owned    1,000.00 

Bonds    . 709,400.00 


22  MANUAL  OF  REFERENCES 

12.  Classify  the  following  items  as  resources  or  liabilities  of  a  na- 
tional bank  and  give  reasons  for  your  classification  of  the  1st,  4th,  6th, 
and    7th:      (1)    Capital    stock,    $50,000;     (2)    Real    estate,    furniture, 
fixtures,  etc.,  $15,046.14;    (3)    Cash,  $69,343.34;    (4)    Surplus  and  net 
undivided  profits,   $19,257.43;    (5)    United   States  bonds,   $108,951.50; 
(6)   Loans  and  discounts,  $242,546.36;    (7)    Deposits,  $301,679.91;    (8) 
Circulation   (i.e.,  notes  outstanding),  $64,950. 

Prove  that  your  classification  is  correct  by  balancing  the  account. 
Then  show  the  changes  made  in  the  account  by  the  following  trans- 
action: The  bank  loans  $25,000.00  for  90  days  at  6  per  cent,  interest, 
and  the  borrower  draws  out  one-half  the  amount,  with  which  he  is 
credited  after  the  bank  has  made  the  proper  deduction  for  interest. 

13.  The  week's  averages  of  the  New  York  banks  for  the  third  week 
in  May  compare  as  follows  in  1905  and  1904: 

1905.  1904. 

Loans   $1,120,426,800  $1,056,553,500 

Deposits    1,165,151,700  1,100,586,100 

Circulation    45,308,300  36,480,400 

Specie    '. 215,174,200  210,002,800 

Legal  tenders   84,333,700  78,143,000 

Explain  why  loans  and  deposits  in  the  above  table  show  practically 
the  same  increase  from  1904  to  1905. 

14.  How  would  the  balance  sheet  of  a  commercial  bank  issuing  an 
ordinary  asset  bank-note  currency  stand  after  the  following  operations? 

The  bank  opens  business  with  a  paid-up  capital  of  $2,000,000  and  a 
surplus  of  $400,000.  It  spends  $50,000  in  its  own  bank  notes  for 
furniture  and  fixtures.  It  discounts  at  six  per  cent,  for  various  cus 
tomers  $4,000,000  of  60-day  notes  and  bills  receivable,  the  borrowers 
taking  one-fourth  of  the  proceeds  in  cash,  one-fourth  in  the  bank's 
own  bank  notes,  and  leaving  the  balance  on  deposit.  Customers  cash 
checks  on  their  accounts  for  $600,000  receiving  two-thirds  of  the 
amount  in  the  bank's  own  bank  notes  and  the  other  third  in  coin  and 
other  kinds  of  ''lawful  money."  Other  customers  make  deposits  of 
$900,000,  of  which  one-third  is  in  "lawful  money,"  one-third  in  the 
bank's  own  bank  notes,  and  one-third  in  the  checks  of  other  depositors 
in  the  same  bank.  The  bank  buys  at  par  $1,200,000  of  railroad  bonds, 
paying  for  them  in  its  own  bank  notes.  It  pays  with  its  own  bank 
notes  expenses  for  wages,  stationery  and  taxes  to  the  amount  of  $10,- 
000.  (b)  What  percentage  of  reserve  is  it  carrying  at  the  end  of 
these  operations? 


AND  EXERCISES  IN  ECONOMICS 


23 


15.  Statement  of  a  national  bank. 


LIABILITIES 


Capital, 

Surplus, 

Undivided    profits, 

Circulation, 

Deposits, 

Due  banks, 


$  Thousand 

464. 

203. 

53. 

404. 

419. 

29. 


1,572. 


RESOURCES 


$  Thousand 

Loans  and  discounts,  708. 

Over-drafts,  .1 

Bonds  to  secure  circula- 
tion (par  value)  450. 
Other  stocks  and  bonds,  163. 
Due  from  reserve  agents,  105. 
Due  from  banks,  21. 
Banking  house,  32. 
Current  expenses  and  taxes,  3. 
Checks  and  cash  items,  4. 
Exchange  for  Clear.  House,  11. 
Notes  of  other  banks,  15. 
Gold,  30. 
Silver,  .9 
Legal  tenders,  9. 
Redemption  fund  in  U.  S.  T.  20. 


1,572. 


What  can  you  learn  from  this  statement  about  the  kind  of  business 
which  the  bank  is  carrying  on,  and  its  power  to  withstand  a  financial 
storm  ? 

16.  How  would  the  balance  sheet  of  a  commercial  bank  stand  after 
the  following  operations?     The  bank  begins  business  with  a  paid-up 
capital  of  $300,000   and  a  surplus  of  $60,000.     It  discounts  for  cus- 
tomers  $600,000   of   four-months  notes   and  bills  receivable,  at   6   per 
cent.,   the   borrowers   taking   one- third   of   the   proceeds   in   cash    (i.e., 
lawful  money ) ,  and  leaving  two-thirds  on  deposit.     Customers  deposit 
$200,000,  of  which  one-half  is  in  cash,  one-quarter  is  in  checks  drawn 
on  this  bank,  and  one-quarter  is  in  checks  drawn  on  other  banks. 

17.  Suppose  that  this  bank  now  reorganizes  as  a  national  bank  and, 
to  secure  the  privilege  of  note  issue,  buys  United  States  2  per  cent, 
bonds  of   a  par  value  of  $90,000   at  $102..     These  bonds   it  deposits 
with  the  Treasurer  of  the  United  States  and  receives  the  full  amount 
of  national  bank  notes  to  which  it  is  entitled.     Depositors  withdraw 
by  check  $180,000,  the  bank  giving  them  $45,000  in  its  notes  and  the 
balance  in  lawful  money.     A  dividend  of  2  per  cent,  is  declared,  and 
is  paid,  one-half  in  lawful  money  and  one-half  in  the  form  of  deposits. 
Present  the  balance  sheet. 


24  MANUAL  OF  REFERENCES 

CHAPTER  8 
BANKING  IN  THE  UNITED  STATES  BEFORE  1914 

REFEKENCES.' 

Hollander,  J.  H.,  Security  holdings  of  national  banks.  A.  E.  Rev., 
3:793-814.  1913. 

Kemmerer,  E.  W.,  Banking  reform  in  the  United  States.  A.  E.  Rev., 
3  (no.  1,  supp.)  :  52-63.  1913.  Round  table  discussion  of  above, 
64-88. 

Kemmerer,  E.  W.,  Seasonal  variations  in  the  New  York  money  mar- 
ket. A.  E.  Rev.,  1:  33-49.  1911. 

National  Monetary  Commission,  Report.  1912.  In  Sen.  Doc.  243, 
62d  Cong.,  2d  Sess. 

Phillips,  ch.  XXX. 

* Source  Book,  324-336  (extract  from  National  Monetary  Commis- 
sion Report),  314-323  (extract  from  1910  report  of  the  Comp- 
troller of  the  Currency ) . 

Sprague,  0.  M.  W.,  Proposals  for  strengthening  the  national  bank- 
ing system.  Q.  J.  E.,  24:  201-242,  634-659;  25:  67-95.  1909-1911. 

United  States  Comptroller  of  the  Currency,  Annual  reports. 

* White,  bk.  Ill,  chs.  IV,  XV,  XVII,  XX,  XXI,  and  appendices 
A  and  B. 

Willis,  H.  P.,  The  banking  question  iii  Congress.  J.  P.  E., 
20:869-885.  1912. 

QUESTIONS. 

1.  Explain  the  method  followed  by  national  banks  in  issuing  bank 
notes.     Why  did  the  banks  often  find  it  more  profitable  to  use  their 
money  in  other  ways  than  by  issuing  bank  notes?     Ref. :    Discussion  in 
various  reports  of  Comptroller  of  the  Currency. 

2.  Section  28  of  the  National  Bank  Act  of  June  3,  1864,  after  pro- 
viding that  a  national  banking  association  may  hold  real  estate  "nec- 
essary for  its  immediate  accommodation  in  the  transaction  of  its  busi- 
ness" and  such  other  real  estate  and  mortgages  thereupon  as  it  may 
have  taken  to  secure  debts  previously  contracted,  provides  that  "Such 
associations   (national  banks)   shall  not  purchase  or  hold  real  estate  in 
any  other  case  or  for  any  other  purpose.  ..." 

(a)  What  is  the  reason  for  the  above  provision? 

(b)  Would   it   be   wise   to   make   a   similar   prohibition   on    savings 
banks? 

3.  Describe  the  clearing  house  and  define  its  economic  advantages. 


AND  EXERCISES  IN  ECONOMICS  25 

4.  If  there  are  twenty  banks  in  a  town  and  no  clearing  house,  how 
many  collections  would  have  to  be  made  by  all  the  banks  daily  as- 
suming that  each  day  depositors  of  each  bank  receive  checks  on  the 
other  nineteen  banks? 

5.  Does  a  clearing  house  enable  the  banks  that  belong  to  it  to  get 
along  with  a  smaller  cash  reserve? 


CHAPTER  9 
THE  FEDERAL  RESERVE  ACT 

REFERENCES. 

Conway,   Thomas,  Jr.,   The   financial   policy  of   the   Federal   reserve 

banks.    J.  P.  E.,  22:  319-331.     1914. 

Federal  Reserve  Board,  The  Federal  Reserve  Bulletin.     Monthly. 
"Phillips,  ch.  XXXI. 
Scott,    W.    A.,    Banking    reserves    under    the    Federal    Reserve    Act. 

J.  P.  E.,  22:  332-344.     1914. 

White,  bk.  Ill,  ch.  XXII  and  appendices  D  and  E. 
Willis,  H.  P.,  The  Federal  Reserve  Act.     A.  E.  Rev.,  4:  1-24.     1914. 

QUESTIONS. 

1.  Name  and   contrast  the   different  kinds   of  banks   in   the  United 
States. 

2.  How  are  notes  issued  under  the  Federal  Reserve  Act? 

3.  If  on  a  given  date  the  surplus  reserve   (i.e.,  the  reserve  in  excess 
of   the   legal   minimum   reserve   required   by   law   to  be   held   against 
deposits)    of  the  New  York  Associated  Banks  amounts  to  $11,000,000, 
and  the  deposits  on  the  same  date  amount  to  $1,164,000,000,  what  is 
the  total  cash  reserve  held  by  the  banks  on  said  date?     What  would  it 
have  been  in  1912? 

4.  The  "New  York  Times"  of  December  8,   1916,  said: 

"The  rediscounting  of  commercial  paper  at  the  Federal  Reserve  Bank 
of  New  York  by  some  of  the  city's  largest  banks  on  Wednesday  had 
the  effect  yesterday  of  improving  general  money  market  conditions. 
Call  loans  which  were  made  at  15  per  cent,  on  Monday,  and  as  high 
as  10  per  cent,  on  Tuesday,  and  touched  seven  per  cent.  Wednesday, 
were  placed  yesterday  at  from  three  to  five  per  cent.  Most  of  the 
loans  were  made  at  four  and  one-half  per  cent.,  the  renewal  rate,  and 
the  closing  quotation  was  three  per  cent.  Time  money  rates  were 
easier." 

Explain  the  process  of  rediscounting  here  referred  to.  In  just  what 
way  did  the  rediscounting  operations  relieve  the  call  money  market? 


26  MANUAL  OF  REFERENCES 

Do  you  consider  that  this  use  of  the  rediscounting  facilities  provided 
by  the  Federal  Reserve  System  was  in  accord  with  sound  banking 
principles?  Was  it  the  best  possible  use  of  the  rediscounting  mechan- 
ism? For  suggestions  see  the  "New  York  Times"  of  December  5,  1916, 
under  the  heading  "Financial  Markets." 


CHAPTER  10 

CRISES  AND  INDUSTRIAL  DEPRESSIONS 
REFERENCES. 

Dewey,  D.  R.,  Financial  history  of  the  United  States,  4th  ed.,  1912. 

Ch.  X. 
England,  Minnie  T.,  Promotion   as  the  cause  of   crises.     Q.   J.   E., 

29:748-767.     1914-1915. 
"Hamilton,  Readings,  91-93,  93-95,  95-98. 

Hobson,  J.  A.,  Evolution  of  modern  capitalism.     Ed.,   1912.     Ch.  7. 
Jones,  E.  D.,  Economic  crises.     1900. 
Juglar,  C.,  and  Thorn,  C.  W.,  A  brief  history  of  panics  and  their 

periodical  recurrence  in  the  United  States.     Ed.,   1916. 
* Materials,  391-396. 

Mitchell,  W.  C.,  Business  cycles.     1913. 

Moore,  H.  L.,  Economic  cycles:    their  law  and  cause.     1914. 
Nelson,  8.  A.,  The  A  B  C  of  Wall  Street.     1900. 
Patterson,  E.  M.,  The  theories  advanced  in  explanation  of  economic 

crises.    A.  A.  A.,  59:  133-147.     1915. 
"Phillips,  chs.  XXVIII,  XXIX. 
*8ource  Book,  138-156. 
Sprague,  0.  M.  W.,  The  crisis  of  1914  in  the  United  States.     A.  E. 

Rev.,  5:  499-533.     1915. 
United  States  Bureau  of  Labor,  Annual  report  for  1886. 

QUESTIONS. 

1.  What  is  a  financial  crisis?     An  industrial  depression? 

2.  Describe  the  trade,  banking  and  price  conditions  which  obtain 
just  preceding,  during  and  immediately  following  a  crisis. 

3.  State  clearly  and  explain  the  movement  of  prices  pf  stocks,  boiulu, 
mortgages,  land,  commodities  generally,  wages  and  interest  rates  on 
long  time  and  short  time  loans,  before,  during,  and  after  a  crisis. 

4.  Tabulate  for  a  series  of  years  covering  periods  of  prosperity  and 
depression,  the  prices  of  stocks,  bonds,  real  estate,  and  of  some 
commodities. 


AND  EXERCISES  IN  ECONOMICS  27 

5.  What  economic  changes  occurred  in  your  own  community  in  the 
panic  of  1893-94,  or  in  the  years  1903-04,  or  in  1907-08? 

6.  Is  it  possible  that  the  amount  of  all  goods  produced  shall  be  in 
excess  of  the  community's  power  of  consumption? 

7.  "As  the  average  American   can   produce  far  more  than   he  can 
consume,  it  has  been  proved  repeatedly  that  as  long  as  the  sale  of  his 
products  is  confined  to  the  home  markets,  over-production  is  certain  to 
be  a  natural  consequence  of  every  prolonged  period  of  activity.     For 
half  a  century,  therefore,  with  regularly  recurring  seasons  of  surplus 
production,  there  came  those   inevitable  commercial  crises  which   em- 
phasized   with    increasing    force    the    necessity    for    foreign    markets." 
(This  passage  is  taken  from  a  reprint  of  a  speech  of  a  congressman.) 

Criticize  the  view   as  to   the  cause  of   commercial   crises   expressed 
in  the  above  statement. 

8.  Is  a  crisis  caused  by  too  much  or  too  little  money,  or  by  some 
other  influence? 

9.  If  there  were  twice  as  much  money  in  the  world,  would  panics 
take  place? 

10.  In  a  period  of  depression  is  there  less  money  than  usual  in  the 
country?     In  the  banks? 

11.  In  what  ways  and  to  what  extent  are  trade  conditions  apt  to 
be  affected  by: 

The  increasing  gold  supply? 
The  trust  movement? 
Increasing  armies  and  navies? 
The  agricultural  situation? 

12.  Explain  the  difference  in  the  motive  of  the  borrower  at  ordinary 
times  and  in  times  of  panic. 

13.  How   are   loans   affected  when   the   reserve   limit   as   established 
either   by   law   or    custom   is   reached   in    England,   Germany    and   the 
United  States? 

14.  What  in  your  opinion  is  the  correct  explanation  of  crises? 

15.  In  what  ways  is  business  affected  by  the  condition  of  the  crops? 
Within  what  limitations?     In  the  case  of  which  crops  is  the  connec- 
tion closest? 

16.  What  element  of  security  is  furnished  by  clearing  houses  during 
panics? 

17.  Describe  the  method  used  by  the  banks  in  meeting  demands  of 
depositors  during  the  panics  of  1893  and  of  1907.      (Dunbar  is  espe- 
cially valuable.     Also  0.  M.  W.  Sprague,  History  of  crises  under  the 
National  Banking  System,  pub.  by  Nat.  Monetary  Com.) 


28  MANUAL  OF  REFERENCES 

CHAPTER  11 
INSTITUTIONS  FOR  SAVING  AND  INVESTMENT 

REFERENCES. 

Chamberlain,  Laurence,  Principles  of  bond  investment.  4th  ed., 
1913. 

The  work  of  the  bond  house.     1913. 

Dcvine,  H.  C.,  People's  cooperative  banks  for  workers  in  towns,  and 
small  holders,  allotment  cultivators,  and  others  in  country  dis- 
tricts. 1908. 

Dexter,  Seymour,  A  treatise  on  cooperative  savings  and  loan  asso- 
ciations.    Ed.,  1894. 
Fisher,  Irving,  Kemmercr,  E.  W.,  Brown,  H.  G.,  and  others,  How  to 

invest  when  prices  are  rising.     1912. 

Guenther,  Louis,  Investment  and  speculation.    1916.     (La  Salle  Uni. ) 
Hamilton,  J.  H.,  Savings  and  savings  institutions.     1902. 
Johnson,    A.    8.,    Influences    affecting    the    development    of    thrift. 

P.  S.  Q.,  22:224-244.     1907. 
Kemmercr,  E.  W.,  The  United  States  Postal  Savings  bank.     P.  S.  Q., 

26:462-499.     1911. 

Kniffin,  W.  H.,  The  savings  bank  and  its  practical  work.     1912. 
*  Phillips,  ch.  XVI. 

Wolff,  H.  W.,  A  cooperative  bank  handbook.     1909. 
Cooperative  banking.     1907. 
People's  banks.     3d  ed.,  1910. 
QUESTIONS. 

1.  What  are  the  nature  and   purpose  of   legislation  restricting  the 
investments  of  savings  banks? 

2.  What  are  these  restrictions  in  this  state?     In  your  own  state? 
In  those  states  which  are  regarded  as  having  the  most  highly  devel- 
oped laws  in  this  field? 

3.  Is  legislation  in  this  field  to  be  considered  as  subsidizing  certain 
types  of  private  enterprise?     If  so,  is  it  socially  justifiable? 

CHAPTER  12 
PRINCIPLES  OF  INSURANCE 

REFERENCES. 

Gephart,  W.  F.,  Principles  of  insurance.     1913. 
Gcphart,  W.  F.,  Insurance  and  the  state.     1913. 
Huelmer,  8.  S.,  Life  insurance.     1915. 
Huelner,  8.  8.,  Property  insurance.     1913. 


AND  EXERCISES  IN  ECONOMICS  29 

Statistical  Abstract  of  the  United  States. 

Valgren,    V.    N.,    Farmers'    mutual    fire    insurance    in    Minnesota. 

Q.  J.  E.,  25:  387-396.     1910-1911. 

Willet,  A.  H.,  Economic  theory  of  risk  and  insurance.     1901. 
Zartman,  L.  W.   (Ed.),  Fire  insurance.     Ed.,  1915. 
Zartman,  L.  W.    (Ed.),  Life  insurance.     Ed.,  1915. 

QUESTIONS. 

1.  What  are  the  conditions  of  economically  sound  insurance?     Give 
at  least  two  examples. 

2.  What  is  the  essential  economic  difference  between  gambling  and 
insurance? 

3.  Give  examples  showing  the  difference  between  a  gambling  house 
and  an  insurance  company? 

4.  Investors  in  Russian  bonds  are  said  to  take  out  policies'  of  insur- 
ance payable  to  themselves  in  the  event  of  the  Czar's  death,  their  ob- 
ject being  to  guard  themselves  against  loss  by  the  depreciation  of  their 
Russian  securities  in  case  of  political  disturbances  that  might  emerge 
upon  a  change  of  rulers. 

(a)  Do  you  regard  such  insurance  as  gambling  or  legitimate  specula- 
tion from  the  standpoint  of  either  insurer  or  insured? 

(b)  Do  you  regard  the  issue  of  such  policies  on  the  part  of  the  in- 
surance companies  as  "sound"? 

5.  Ought  lotteries  to  be  permitted  by  law? 

6.  Suppose  1,000  owners  of  1,000  buildings  worth  $7,000  each  wish 
to  insure  themselves  against  fire.     If  the  risk  for  the  class  of  build- 
ings involved  in  such  that  seven  out  of  1,000  burn  each  year,  what 
annual   payment  from   each   owner  would   be  necessary  to  insure   all 
against   total   loss — expenses   of   management,   interest,   etc.,   being   ig- 
nored?    (F.  M.  Taylor.) 

7.  Suppose  that  a  corporation   owns   500   buildings  worth   $100,000 
each;  that  to  insure  against  fire  in  an  ordinary  company  would  cost 
$250  for  each  building;  and  that  the  corporation  is  convinced  that  by 
the  expenditure  of  $10,000  the  fire  loss  can  be  reduced  to  an  average 
of  one  building  every  three  years.     Would  it  pay  the  corporation  to 
insure  with  some  company?     (F.  M.  Taylor.) 

CHAPTER  13 
INTERNATIONAL  TRADE 

REFERENCES. 

BastaUe,  C.  E.,  The  theory  of  international  trade.     1897. 
Brown,  H.  O.,  International  trade  and  exchange.     1914. 


30  MANUAL  OF  REFERENCES 

Clare,  G.,  The  A  B  C  of  the  foreign  exchanges.     1895. 
Escher,  Franklin,  The  elements  of  foreign  exchange.     2d  ed.,   1911. 
Goschen,  Viscount,  The  theory  of  the  foreign  exchanges.     1898. 
Johnson,  E.  R.,  Probable  changes  in  the  foreign  trade  of  the  United 

States   resulting  from  the  European  war.     A.  E.  Rev.,   6  (no.    1, 

supp. )  :  17-25.     1916.     Round  table  discussion  of  above,  26-49. 
Johnson,  E.  R.,  Van  Metre,  T.   W.,  Huebner,  G.  G.,  and  Hanchett, 

D.  8.,  History  of  domestic  and  foreign  commerce  of   the  United 

States.     1915. 
*Source  Book,  337-346. 
Willis,  H.   P.,   Transportation   and   competition   in   South   American 

markets.     A.  E.  Rev.,  2:  814-833.     1912. 

QUESTIONS. 

1.  Is  it  bad  policy  to  let  the  people  of  a  suburban  village  spend 
money  in  the  city  for  things  that  could  be  produced  at  home? 

2.  Is  it  bad  policy  for  California  to  buy  New   England  manufac- 
tures ? 

3.  Give  examples  of  the  industrial  advantages  of  America  as  com- 
pared with  Europe. 

4.  Is  the  alleged  superior  efficiency  of  the  American  workman  over 
the   competing  workman   of   Europe   connected   in   any  way   with   the 
principle  of  proportionality? 

5.  Community  A  has  lands  that  can  produce  wheat  at  a  cost  of  60 
cents  per  bushel,  corn  at  40  cents  per  bushel  and  potatoes  at  40  cents 
per  bushel.     Community  B  can  produce  wheat  at  70  cents  per  bushel, 
corn  at  45  cents  per  bushel  and  potatoes  at  42  cents  per  bushel.     Sup- 
posing that  each  community  can  raise  just  enough  of  these  foodstuffs 
for   its   own   use,  will   there  be   any   incentive   for   them   to   exchange 
these  products? 

6.  "A  man  is  of  all  sorts  of  luggage  the  most  difficult  to  be  trans- 
ported."    What  is  the  bearing  of  this  fact  upon  the  theory  of  inter- 
national trade? 

7.  Can  a  country  have  a  persisting  excess  of  merchandise  exports 
over  merchandise  imports?     If  so,  under  what  conditions? 

8.  If  foreign  exchange  suddenly  rose  several  cents,  while  imports 
and  exports  remained  the  same,  to  what  causes  might  it  be  due? 

9.  If  as  the  result  of  a  year's  foreign  trade  nation  A  obtains  from 
other  nations  $10,000,000  in  gold  coin  in  settlement  of  the  balance  of 
international  indebtedness,  to  what  extent  does  that  sum  measure  the 
gain  of  nation  A  from  international  trade?    Reasons. 

10.  The  statistics  of  exports  and  imports  of  the  United  States  for  the 
year  1908-1909  show  an  excess  of  exports  over  imports  of  $351,000,- 


AND  EXERCISES  IN  ECONOMICS  31 

000  in  merchandise;  $12,000,000  in  silver  and  $48,000,000  in  gold. 
Explain  clearly  how  the  United  States  could  have  had  an  excess  of  ex- 
ports of  merchandise,  silver  and  gold  in  the  same  year. 

11.  If  demand  exchange  on  London  were  selling  at  $4.835  in  New 
York,  would  that  indicate  anything  as  to  the  relative  values  of  our 
imports  and  exports?     Would  gold  be  shipped  under  these  conditions 
and  if  so  in  which  direction?     Explain. 

12.  Explain  clearly  the  condition  of  commerce  under  which  demand 
sterling  bills  of  exchange  will  sell  at  $4.875  in  the  New  York  exchange 
market. 

13.  If  the  merchandise  imports  from  England  to  the  United  States 
equalled  the  exports  from  the  United  States  to  England,  what  would 
be  the  state  of  exchange  on  London?     Would  there  be   any   greater 
advantage  to  either  of  the  countries  engaged  in  trade? 

14.  What   effect   on    exchange   has   the   holding   of   American   bonds 
abroad  ? 

15.  If   large   shipments   of  wheat   are  made  to   England,   will   bills 
of  exchange  on  London  be  higher  or  lower  in  New  York? 

16.  When   in  New  York   a   sight  draft   on   London   for   £5000   sells 
for  $24,150,  in  which  direction  are  gold  remittances  likely  to  be  mov- 
ing?   Give  reasons. 

17.  If  England  sells  $10,000.000  worth  of  our  securities  to  Ameri- 
cans, what  is  the  effect  on  exchange  rates? 

18.  Show  what,  in  a  gold-producing  country,  would  be  the  relations 
and  interaction  of  new  gold  supply,  prices,  relative  amounts  of  imports 
and  exports,  and  rate  of  exchange.      (Sumner.) 

19.  A  nation  with   n   dollars  in  circulation   has  to   pay   a  war   in- 
demnity of  n  dollars  to  another  country  having  the  same  circulation. 
How  much   money  will   each  then  have,  and  what  will  be  the  effect 
on  prices,  foreign  trade,  rate  of  exchange?      (Davenport.) 

20.  Suppose  an  increase  in  the  volume  of  our  currency,  due  to  a  new 
issue   of   silver,   what  would   be  the   effect   upon   international   trade? 
Would  this  effect  be  lasting?     Would  your  answer  depend  at  all  upon 
the  condition  of  our  currency  at  the  time  the  increase  occurred? 

21.  If  through  the  improvement  of  our  banking  and  currency  sys- 
tem a  much  larger  percentage  of  the  business  of  the  country  comes  to 
be    done    through    the    use    of    credits     (rather    than    money)    as    the 
medium  of  exchange,  what  will  be  the  effect  on    (a)    the  quantity  of 
money   in  circulation,    (b)    the  general  level  of  prices,    (c)    the  com- 
position   of   the   country's   media   of   exchange,    (d)    the   international 
movement    of    gold,    (e)    the    interests    of    debtors    and    creditors,    re- 
spectively ? 


32 


MANUAL  OF  REFERENCES 


22.  Each  one  of  two  countries,  A  and  B,  can,  by  the  application  of 
a  given  amount  of  labor  to  its  material  resources,  produce  any  one 
or  all  of  the  commodities  M,  N,  O,  P,  Q,  R  and  S,  as  exhibited  in 
the  following  table: 


Commodity. 

M 

N 

O 

P 

Q 

R 


Country  A. 
50  tons 

1000  yards 
,  25  bales 
900  bushels 
600  ounces 

5000  gallons 

2500  pounds 


Country  B. 

60  tons 
1100  yards 
20  bales 
800  bushels 
650  ounces 
5000  gallons 
2000  pounds 


(a)  In  the  absence  of  restrictive  legislation  is  each  country  likely 
to  produce  all  of  these  commodities  for  itself?     Why  or  why  not? 

(b)  If  conditions  are  such  as  to  lead  to  the  territorial  division  of 
labor,    which    commodities    are   most    likely   to   be    produced    in    each 
country  ? 

(c)  About  which  of  these  commodities  is  there  the  least  certainty 
on  this  point?     Why? 


CHAPTER  14 
THE  POLICY  OF  A  PROTECTIVE  TARIFF 

REFERENCES. 

Bolen,  G.  L.,  Plain  facts  as  to  the  trusts  and  the  tariff.    1902.-   Pt.  II. 
Daniels,  W.  M.,  The  elements  of  public  finance.     Ed.,  1911.     Pt.  II, 

ch.  VII. 
Johnson,  E.   H.,   The   effect   of   a   tariff   on    production.     Q.    J.   E., 

18:  135-137.     1903-1904. 

Patten,  8.  N.,  The  economic  basis  of  protection.     1890. 
*  Source  Book,  347-357,  358-360. 
Wallace,  H.  B.,  A  balanced  tariff.    A.  E.  Rev.,  2:  568-575.     1912. 

QUESTIONS. 

1.  Can  it  be  of  advantage  to  trade  freely  with  one  nation  if  gen- 
eral free  trade  is  bad? 

2.  If  there  were  no  legal  bar  to  a  tariff  between  the  states,  would 
a  tariff  probably  be  imposed?     If  so,  would  it  be  a  wise  measure? 

3.  Discuss   the   contention   that   a   protective   tariff  by   helping   to 
keep  out  imports  of  foreign  goods  tends  to  maintain  a  favorable  balance 
of  trade. 


AND  EXERCISES  IN  ECONOMICS  33 

4.  "The  territorial  distribution  of  money  is  both  a  determined  and 
a  determining  factor  in  international  trade." 

Explain  the  meaning  of  this  statement  and  show  its  relation  to  the 
"favorable  balance  of  trade"  argument  for  protection. 

5.  An  Englishman  gave  this  argument  for  protection:    "If  an  Eng- 
lishman buys  a  frying  pan  from  a  German  for  a  shilling   (24  cents), 
then    England   gets   the    frying   pan   and   Germany   gets   the   shilling, 
whereas  if  an  Englishman  buys  the  frying  pan  from  an  English  manu- 
facturer for   13  pence    (26  cents),  England  gets  both  the  frying  pan 
and  the  13  pence.     The  increase  in  price  benefits  England  because  the 
money   remains   within   the   country,    instead   of   going   abroad   to  in- 
crease  the   wealth    of    foreign   nations."      Give   your    opinion    of   this 
argument. 

6.  Discuss  this  statement:    "The  American  people  send  abroad  over 
$100,000,000  a  year  to  pay  for  imported  sugar.     To  meet  this  bill  re- 
quires the  wheat  crop  of  over  7,100,000  acres.     But  all  the  sugar  now 
imported  could  be  grown  on  1,700,000  acres  in  beets  or  cane.     In  other 
words  we  are  throwing  away  the  product  of  approximately  5,400,000 
acres  of  land  by  not  growing  our  own  sugar." 

7.  A  New  York  daily  has  contended  that  "Of  course,  we  should  be 
the  gainers  if  every  pound  of  it  (raw  cotton)  were  exported  in  manu- 
factured form.     Every  process  through  which  the  raw  material  passes 
in  its  conversion  into  fabrics  would  mean  employment  for  American 
wage-earners." 

Discuss  the  proposition  that  the  aggregate  for  the  labor  of  Ameri- 
can wage-earners  is  less  if  we  export  raw  cotton  than  if  we  should 
manufacture  the  raw  cotton  in  this  country  for  export. 

8.  Assuming  that  an  import  duty  on  tea,  if  sufficiently  high,  would 
create  a  tea  growing  industry  in  the  United  States  capable  of  supplying 
the  whole  domestic  demand,  trace  the  various  economic  effects  of  such 
a  duty. 

9.  Who  gained  when  Hawaiian  sugar  (before  annexation)  was  ad- 
mitted free  of  duty,  while  other  sugar  was  taxed? 

10.  If  the  owners  of  marble  quarries  can  show  that  their  net  in- 
come is  30  per  cent,  greater  by  reason  of  the  protective  tariff  upon 
foreign  marbles,  does  this  show  that  the  tariff  increases  the  wealth 
of  the  protecting  country? 

11.  State  any  proposition  which  you  think  that  you  can  maintain 
about  the  relation  between  high  or  low  wages  and  international  com- 
petition.    Maintain  your  proposition. 

12.  What  do  you  say  to  the  plan  of  so  adjusting  duties  on  imports 
as  to  equalize  the  "labor  cost"  of  imported  and  domestic  commodities, 


34  MANUAL  OF  REFERENCES 

through  the  levy  of  duties  which  will  just  offset  the  higher  wages  paid 
by  the  American  employer? 

13.  Is  a  high  rate  of  money  wages  an  obstacle  to  the  successful  con- 
duct of  industry  in  competition  with  countries  where  money  wages  are 
low? 

14.  What  was  the  argument  originally  used  as  to  the  comparative 
wage  levels  here  and  abroad  so  far  as 'the  starting  of  certain  industries 
in   this   country   was    concerned?      Compare   this    argument   with    the 
current  protectionist  argument  as  to  the  relation  between  the  tariff 
and  the  present  general  wage  level  in  the  United  States. 

15.  What  help  should  the  law  of  wages  give  in  explaining  the  present 
inequality  as  among  the  wage  scales  in  Germany,  France,  England  and 
the  U.  S.? 

16.  If  it  would  pay  us  to  admit  goods  free,  may  we  be  justified  in 
taxing  them  to  force  concessions  from  the  other  country? 

17.  What  conditions  as  to  consumption  and  production  at  home  and 
abroad  would  be  most  favorable  to  the  shifting  of  an  import  dutj   on 
a  manufactured  article  entirely  to  the  consumer? 

18.  (a)   A  and  B  are  two  tropical  islands  inhabited  by  friendly  peo- 
ples and  producing  the  same  commodities.    The  climate,  soil  and  topog- 
raphy of  A  are  such  that  all  kinds  of  products  can  be  produced  there 
with  less  effort  than  they  can  be  produced  in  B.     Could  there  be  any 
incentive  for  the  people  of  A  to  trade  with  the  people  of  B? 

(b)  Debarring  all  feelings  of  hostility  and  of  sentimental  attach- 
ment to  home,  is  there  any  reason  why  the  people  of  B  should  not  all 
emigrate  to  A? 

(c)  Could  B  equalize  conditions  of  production  by  enacting  a  pro- 
tective tariff  on  the  products  of  the  two  islands  ? 

(d)  Suppose  A  were  discovered  after  a  strong  civilization  had 
grown  up  on  B.    Might  conditions  be  such  that  A  could  with  advantage 
to  itself  exact  a  protective  tariff? 


CHAPTER  15 
AMERICAN  TARIFF  HISTORY 

REFERENCES. 

*Blakey,  R.  G.,  The  new  revenue  act.     A.  E.  Rev.,  6:  837-850.     1916. 
Curtis,  J.  P.,  The  administrative  provisions  of  the  revenue  act  of 

1913.     Q.  J.  E.,  28:  31-45.     1913-1914. 
Hoffmann,  I.  N.,  Customs  administration  under  the  1913  tariff  act. 

J.  P.  E.,  22:  845-871.     1914. 


AND  EXERCISES  IN  ECONOMICS  35 

McKinley,  Wm.,  History  of  tariff  legislation,   1812-1896.     1896. 
Sumner,  W.  G.,  History  of  protection  in  the  United  States.     1877. 
Taussig,  F.  W.,  How  tariffs  should  not  be  made.   A.  E.  Rev.,  1 :  20-32. 

1911. 

Taussig,  F.  W.,  Tariff  History  of  the  United  States.     6th  ed.,  1914. 
Taussig,  F.   W.,  The  tariff  debate  of   1909  and  the  new  tariff  act. 

Q.  J.  E.,  24:  1-38.     1909-1910. 
*Willis,   H.    P.,    The   tariff   of    1913.      J.    P.    E.,    22:  1-42,    105-131, 

218-238.      1914. 

QUESTIONS. 

1.  In  the  light  of  American  tariff  history  what  would  you  say  were 
(1)    the  principal  advantages  and    (2)    the  principal  disadvantages  of 
a  highly  protective  tariff  as  a  primary  source  of  public  revenue?    Illus- 
trate your  points  by  historical  references. 

2.  If  other  countries  can  carry  our  commerce  cheaper  than  we  can 
do   it   ourselves  and   if   the  citizens  of   this   country  can   invest   their 
money  with   greater  profit   in   other   industries,   what   are   the  advan- 
tages and  disadvantages  of  allowing  those  countries  to  carry  our  com- 
merce ? 

3.  Tabulate  and  diagram  the  values  of  the  imports  and  of  the  ex- 
ports of  the  U.  S.  to  and  from  Europe,  N.  A.,  S.  A.,  Asia,  Oceanica  and 
Africa   for   the   latest   five   years   reported.      Discuss    the   question    of 
American    exports    and    imports    in    a    paragraph    not    exceeding    200 
words  in  length.     Stat.  Abst.   (under  Progress  of  U.  S.). 

4.  Make  a  list  of  the  ten  leading  articles  exported   from   and  the 
ten  leading  articles  imported  into,  the  U.  S.  for  the  latest  year  avail- 
able.    What  do  these  show  as  to  the  position  of  the  U.  S.  in  inter- 
national commerce?     Stat.  Abst. 


CHAPTER  16 
OBJECTS  AND  PRINCIPLES  OF  TAXATION 

REFERENCES. 

* Bullock,    C.   J.,   Selected   readings    in   public   finance.      1906.     Chs. 
VIII,  IX. 

The  growth  of  federal  expenditures.     P.  S.  Q.,  18:  97-111.     1903. 
*Daniels,  Pt.  II,  chs.  I-IV. 
Edgeworth,  F.   Y.,  The  subjective  element  in  the  first  principles  of 

taxation.     Q.  J.  E.,  24:459-470.     1909-1910. 
*Plehn,  C.  C.,  Public  finance.    3d  ed.,  rev  and  enl.  1913.    Pts.  I,  II. 


^36  MANUAL  OF  REFERENCES 

Round   table   discussion   of   taxation.     A.    E.    Assn.    Bui.,    4th    ser., 

1  (no.  2)  :  333-346.     1911. 
Seligman,  E.  R.  A.,  Essays  in  taxation.     8th  ed.,  1913. 

QUESTIONS. 

1.  Does  taxation  ever  infringe  on  the  right  of  private  property? 

2.  What  is  it  a  citizen  gets  in  return  for  his  taxes? 

3.  Is   there   any   relation   between   the   taxes   paid   and   the   benefits 
secured  from  government? 

4.  In  what  ways  may  we  understand  the  proposition  that  taxation 
should  be  proportioned  to  ability? 

5.  It  is  claimed  by  some  that  the  use  by  the  government  of  indirect 
taxes   increases    existing   inequalities   in    the   personal   distribution   of 
wealth.     What  reasons  may  be  given  for  or  against  this  opinion? 


CHAPTER  17 
PROPERTY  AND  CORPORATION  TAXES 

REFERENCES. 

Brooks,  R.  C.,  The  German  imperial  tax  on  the  unearned  increment. 

Q.  J.  E.,  25:  682-709.     1910-1911. 
Bullock,  Chs.  XI,  XV. 
Compton,  W.  M.,  Recent  tendencies  in  the  reform  of  forest  taxation. 

J.  P.  E.,  23:  971-979.     1915. 
* Hamilton,  Readings,  560,  561. 
Robinson,  M.  H.,  The  Federal  corporation  tax.   A.  E.  Rev.,  1:  691-723. 

1911. 

*Source  Book,  130-137. 
Tucker,  R.  $.,  The  British  taxes  on  land  values  in  practice.    Q.  J.  E., 

29:794-819.     1914-1915. 
United  States  Bureau  of  Corporations,  Report   on  the  taxation   of 

corporations.    Pts.  I-IV.     1909-1912. 
Special  report  on  taxation.     1913. 
Young,  A.  N.,  The  single  tax  movement  in  the  United  States.     1916. 

QUESTIONS. 

1.  A  recent  newspaper  item  says:    "This  is  the  year  real  estate  is 
assessed.     Turn  the  cow  loose  in  the  front  yard,  tear  down  the  fence, 
make  things  look  generally  dilapidated,  for  it  will  be  money  in  your 
pocket."     What  does  this  indicate  regarding  taxation? 

2.  The  parts  of  an  estate  divided  into  fifteen  equal  shares  by  ex- 


AND  EXERCISES  IN  ECONOMICS  37 


pert  real  estate  agents  were  soon  after  assessed  variously  from 

to  $2850  for  purposes  of  taxation.     What  does  this  indicate?      (From 

Sumner's  Problems.) 

3.  Explain  how  and  why  the  general  property  tax  has  been  break- 
ing down  in  the  United  States  with  reference  to  the  taxation  of  public 
service  corporations. 

4.  What  is  meant  by  the   separation   of   state  and  local   revenues? 
What  advantages  do  the  advocates  of  separation  claim  for  their  plan? 
What  is  your  judgment  with  reference  to  its  advisability? 

5.  What  is  meant  by  the  proposition  that  a  single  tax  on  land  values 
is  paid  for  all  time  by  the  one  who  owns  the  land  at  the  time  the 
tax  is  first  imposed? 

6.  How  does  Massachusetts  tax  interstate  railroads  running  through 
the  state?     What  defects,   if   any,   do   you   see   in   the  Massachusetts 
plan? 

7.  Can    taxation    be    used   to    secure    some    of   the    profits    of   large 
corporations  ? 


CHAPTER  18 
PERSONAL  TAXES 

REFERENCES. 

Adams,  T.  8.,  The  effect  of  income  and  inheritance  taxes  on  the  dis- 
tribution of  wealth.     A.  E.  Rev.,  5  (no.  1,  supp.)  :  234-244.     1915. 

The  place  of  the  income  tax  in  the  reform  of  state  taxation. 
A.  E.  Assn.  Bui.,  4th  ser.,  1  (no.  2)  :  302-321.     1911. 

*Blalcey,  R.  G.,  The  new  income  tax.     A.  E.  Rev.,  4:  25-46.     1914. 

Bowley,  A.  L.,  The  British  super-tax  and  the  distribution  of  income. 
Q.  J.  E.,  28:  255-268.     1913-1914. 

*Bullock,  chs.  XII,  XVI. 

The  taxation  of  property  and  income  in  Massachusetts.    Q.  J.  E., 
31:1-61.     1916-1917. 

Daniels,  Pt.  II,  ch.  VIII. 

Grice,  J.  W.,  Recent  developments  in  taxation  in  England.     A.  E. 
Rev.,  1:  488-504.     1911. 

Hill,  J.  A.,  The  income  tax  of  1913.     Q.  J.  E.,  28:  46-68.     1913-1914. 

Seligman,  E.  R.  A.,  The  income  tax.    Ed.,  1914. 

Smith,  R.  H.,  Distribution  of  income  in  Great  Britain  and  incidence 
of  the  income  tax.     Q.  J.  E.,  25:216-238.     1910-1911. 

West,  Max,  The  inheritance  tax.     2d  ed.,  1908. 


38  MANUAL  OF  REFERENCES 

QUESTIONS. 

1.  What  is  the  present  status  of  the  inheritance  tax  in  the  American 
commonwealths  ? 

2.  Discuss  the  proposition  that  income  is  the  normal  source  of  taxa- 
tion. 

3.  Outline  the  history  of  income  tax  legislation  by  the  federal  gov- 
ernment.    What  were  the  conditions  which  led  to  the  income  tax  legis- 
lation of  1913? 

4.  What  conception  of  income  does  the  recent  income  tax  embody  f 
Illustrate   some  peculiar  distinctions   resulting  from  this  use  of  "in- 
come." 

5.  What  is  your  opinion  concerning  the  justice  of  progressive  taxa- 
tion? 

C.  Name  the  two  principal  arguments  in  favor  of  progressive  taxa- 
tion. Which  two  arguments  in  favor  of  progressive  taxation  do  you 
consider  the  strongest  and  why?  Which  two  arguments  against  pro- 
gressive taxation  do  you  consider  the  weakest  and  why?  To  what 
kinds  of  taxes,  if  to  any,  is  the  principle  of  progression  inapplicable 
and  why? 


CHAPTER  19 
METHODS  OF  INDUSTRIAL  REMUNERATION 

REFERENCES. 

*Adams,  T.  8.,  and  Sumner,  H.  L.,  Labor  problems.     8th  ed.,  1914. 

Chs.  IV,  IX.  X. 
Commons,  J.  R.    (Ed.),  Trade  unionism  and  labor  problems.     1905. 

Ch.  XI. 
*Commons,  J.  R.,  and  Andrews,  J>  B.,  Principles  of  labor  legislation. 

1916.     Ch.  II,  sees.  1-3. 
Cross,   Ira  B.,   Cooperation   in    California.     A.   E.   Rev.,    1 :  535-544. 

1911. 

Fay,  C.  R.,  Cooperation  at  home  and  abroad.  1898. 
Oilman,  N.  P.,  Profit-sharing  between  employer  and  employee.     1889. 
Hoxie,  R.  F.,  Why  organized   labor   opposes   scientific  management. 

Q.  J.  E.,  31:  62-85.     1916-1917. 
Round   table  discussion.     Industrial   efficiency  and   the   interests   of 

labor.     A.  E.  Rev.,  2  (no.  1,  supp.)  :  117-130.     1912. 
Schloss,  D.  F.,  Methods  of   industrial  remuneration.     3d   ed.,   1898. 
Virtue,    (?.    O.,    Cooperative    coopers    of    Minneapolis.      Q.    J.    E., 
19:527-544.     1904-1905. 


AND  EXERCISES  IN  ECONOMICS  39 

Wolff,  H.   W.,  Neglected  opportunities  of  cooperation.     Econ.  Rev., 

16:  190-206.     1906. 

\ 

QUESTIONS. 

1.  With   increasing   division   of   labor   is   there   greater   or   less   op- 
portunity  for   the   payment   of    laborers   according   to   the   piece-wage 
plan? 

2.  Discuss  the  following  statement:    Under  the  piece-work  system  the 
foreman  looks  out  for  the  quality  and  the  operative  for  the  quantity 
of  the  work;   under  the  time- wage  system  the  foreman  looks  out  for 
the  quantity  and  the  laborer  for  the  quality  of  the  work. 

3.  What  remedy  has  the  foreman  for  an  inefficient  laborer  working 
under  the  time-wage  system? 

4.  Is   time-   or   piece-work   best   adapted   to  the   following  kinds  of 
laborers:     coal-miners,  coopers,  farm-hands,   printers,   engravers,   shoe- 
factory  hands,  railroad  brakemen,  telegraph  operators? 

5.  Since  under  the  piece-work  system  a  man  is  paid  only  for  what 
he  does  is  there  any  reason  for  discharging  a  workman  employed  under 
this  plan  whose  efficiency  falls  below  the  average? 

6.  Describe  any  case  of  profit-sharing  you  may  have  seen  in  opera- 
tion. 

7.  In   the   case  of   a   cooperative  general   store   do   economic   profits 
emerge?     If  so,   where  do  they  go? 

8.  If  you  have  seen  a  cooperative  store  in  operation  tell  what  was 
its  success. 

9.  Compare    and    explain    producers'    and    consumers'    cooperation, 
showing  the  difficulties  and  advantages. 


CHAPTER  20 
ORGANIZED  LABOR 

REFERENCES. 

*  Adams  and  Sumner,  chs.  VI,  VII. 

Barnett,  G.  E.,  National  and  district  systems  of  collective  bargain- 
ing in  the  United  States.  Q.  J.  E.,  26:  425-443.  1911-1912. 

Barnett,  G.  E.,  The  dominance  of  the  national  union  in  American 
labor  organization.  Ibid.,  27:455-481.  1912-1913. 

Carlton,  F.  T.,  The  history  and  problems  of  organized  labor.     1911. 

Commons,  chs.  II,  VI. 

*  Commons  and  Andrews,  Ch.  Ill,  sec.  1. 


40  MANUAL  OF  REFERENCES 

Groat,  G.  G.,  An  introduction  to  the  study  of  organized  labor  in 
America.  1916. 

Hoxie,  R.  F.,  Scientific  management  and  labor.     1915. 

Hoxie,  R.  P.,  The  truth  about  the  I.  W.  W.  J.  P.  E.,  21 :  785-797. 
1913. 

Hoxie,  R.  P.,  Trade  unionism  in  the  United  States:  general  charac- 
ter and  types;  the  interpretation  of  union  types.  J.  P.  E., 
22:  201-217,  464-481.  1914. 

Lewis,  H.  T.,  The  economic  basis  of  the  fight  for  the  closed  shop. 
J.  P.  E.,  20:  928-952.  1912. 

McCabe,  D.  A.,  The  standard  rate  in  American  trade  unions.     1912. 

Mitchell,  John,  Organized  labor.     1902. 

*  Source  Book,   214-227    (extract   from   McCabe). 

Webb,  Sidney  and  Beatrice,  Industrial  democracy.     1897. 

Wolman,  L.,  The  boycott  in  American  trade  unions.     1916. 

QUESTIONS. 

1.  Are  the  opportunities  for  workmen  to  rise  to  the  rank  of  mas- 
ters as  great  as  formerly? 

2.  What    are    the    chief    causes    of    the    origin    and    rise    of    trade 
unions?     Distinguish  between  a  trade  union  and  a  labor   union. 

3.  What  are  the   conditions  favorable   to  national   agreements   be- 
tween trade  unions  and  employers'  associations?     Explain  clearly  the 
bearing  of  each  of  these  conditions. 

4.  Describe  the  practices  included  under  the  term  "direct  action," 
and  contrast  with  the  methods  of  collective  bargaining  and  legislation. 

5.  Are  strikes  becoming  more  or  less  frequent  and  important  in 
your  state?  In  answer  to  this  question  give  figures  from  1881  on  if 
obtainable,  showing  number  of  strikes;  establishments  affected  and  to 
what  extent;  loss  in  wages  and  to  employers.  Diagram  the  figures. 
Ref.,  U.  S.  Bu.  of  Labor,  Annual  report,  1906. 

6.  Do  trade  unions  increase  or  decrease  the  number  of  strikes? 

7.  If  you  were  an  officer  of  a  trade-union,  would  you  begin  a  strike 
when  trade  was  good  or  when  it  was  poor? 

8.  Does  it  make  any  difference  in  the  permanence  of  an  increase  of 
wages  brought  about  by  a  strike,  whether  the  employer  is  one  of  the 
more  successful  or  one  of  the  less  successful  in  that  business? 

9.  Give  examples  of  the  different  kinds  of  boycott.     What  seems  to 
be  the  attitude  of  the  federal  courts  as  to  the  lawfulness  of  boycotts? 

10.  Is  there  any  similarity  between  the  methods  of  trade  unions 
and  the  etiquette  of  the  medical  and  the  legal  professions? 


AND  EXERCISES  IN  ECONOMICS  41 

11.  Some   trade    unions   limit   the    number    of   apprentices    in    their 
trades.     Is  this  a  justifiable  policy  on  their  part? 

12.  Of  the  methods  employed  by  trade  unions  to  raise  the  wages  of 
their  members,  which  are  prejudicial  and  which  are  not  prejudicial  to 
the  interests  of  the  rest  of  the  community,  including  non-union  labor? 
Give  reasons. 

13.  Can  wages  be   affected  by  the   "collective  bargaining"   of   trade 
unions  and   if  so  indicate  in  that  connection   a  justification    (if  one 
exists)   for  trade  union  organization. 

14.  If  a  trade  union  sets  a  minimum  rate  of  wages  lower  than  the 
competitive    market    rate    would    be    in    the    absence    of    organization, 
which   rate   would    the   members   receive?      State   the   facts    from   the 
Source  Book  which  lead  you  to  your  answer. 

15.  Have   trade   unions   raised   or    lowered   the   wages   of   non-union 
labor? 

16.  What  is  the  attitude  of  American  trade  unions  toward  efficiency 
systems  as  attempts  to  introduce  improved  methods  of  production   (not 
systems  of  payment)  ? 


CHAPTER  21 
PUBLIC  REGULATION  OF  HOURS  AND  WAGES 

REFERENCES. 

Abbott,  Edith,  Progress  of  the  minimum  wage  in  England.    J.  P.  E., 
23:268-277.     1915. 

Women  in  industry.     1915. 

* Adams  and  Sumner,  chs.  II,  VIII,  XII,  sees.  1-4,  9,  XIII,  sec.  2. 

Barnett,  G.  E.,  and  McCabe,  D.  A.,  Mediation,  investigation  and  ar- 
bitration of  industrial  disputes.     1916. 

Clark,  V.  8.,  The  labor  movement  in  Australasia.     1906. 

Commons,  chs.  VII,  VIII,  XVIII,  XXI. 

*Commons   and  Andrews,   chs.   Ill,  sees.  2,  3,   IV,  V. 

Compton,   W.   M.,   Wage  theories   in   industrial   arbitration.     A.   E. 
Rev.,  6:  324-342.     1916. 

Hammond,  M.  B.,  Judicial  interpretation  of  the  minimum  wage  in 
Australia.     A.  E.  Rev.,  3 :  259-286.     1913. 

Hammond,  M.  B.,  Wages  boards  in  Australia.     Q.  J.  E.,  29:  98-148, 
326-361,  563-630.     1914-1915. 

Holcombe,  A.  N.,  The  legal  minimum  wage  in  the  United  States. 
A.  E.  Rev.,  2:  21-37.     1912. 

Kelley,  Florence,  Minimum-wage  laws.    J.  P.  E.,  20:  999-1010.     1912. 


42  MANUAL  OF  REFERENCES 

Millis,  H+  A.,  Some  aspects  of  the  minimum  wage.  J.  P.  E., 
22:  132-155.  1914. 

Mote,  C.  H.,  Industrial  arbitration.     1916. 

Persons,  C.  E.,  Women's  work  and  wages  in  the  United  States. 
Q.  J.  E.,  29:  201-234.  1914-1915. 

Suffern,  A.  E.,  Conciliation  and  arbitration  in  the  coal  industry  of 
America.  1915. 

United  States  Bureau  of  Labor  Statistics,  Bui.  175.  1915.  Sum- 
mary of  report  on  woman  and  child  wage-earners. 

Webb,  Sidney,  The  economic  theory  of  a  legal  minimum  wage. 
J.  P.  E.,  20:  973-998.  1912. 

Wise,  E.  F.,  Wage  boards  in  England.     A.  E.  Rev.,  2:  1-20.     1912. 

QUESTIONS. 

1.  If  you  can  do  more  work  in  two  hours  than  in  one,  can  you  do 
more  continuously  in  sixteen  consecutive  hours  than  in  eight? 

2.  What    determines    the    maximum    study    time    for    the    earnest 
student  ? 

3.  When  does  an  industrious  man   stop  working  on  his  own  farm, 
and  why? 

4.  If  production   is  reduced  one-fourth  by   shorter  hours,   is   "work 
made"  to  that  degree  for  the  unemployed? 

5.  Defend  the  minimum  wage  policy  from  the  workman's  point  of 
view,  and  state  the  employers'  objections  thereto. 

6.  Suppose  it  were  proposed  to  establish  by  law  a  universal  nine- 
hour  day  for  men. 

(a)  Under  what  conditions  would  you  consider  such  a  law  socially 
beneficial  ? 

(b)  What  other  agencies  might  accomplish  the  ends  which  such  a 
law  is  designed  to  effect? 

(c)  What  are  the  chief  social  and  economic  effects  which  you  would 
expect  from  such  a  law? 


CHAPTER  22 
OTHER  PROTECTIVE  LABOR  AND  SOCIAL  LEGISLATION 

REFERENCES. 

* Adams  and  Sumner,  chs.  V,  sec.  3,  XII,  sec.  5,  XIII,  sec.  3. 
Addams,  Jane,  Child  labor  legislation,  a  requisite  for  industrial  ef- 
ficiency.    A.  A.  A.,  25:  542-550.     1905. 


AND  EXERCISES  IN  ECONOMICS  43 

Commons,  chs.  XIV,  XIX,  XX,  XXII,  XXIII,  XXVI,  XXXVIII. 

* Commons  and  Andrews,  Chs.  VI,  VII,  IX. 

Fisher,  W.  C.,  The  field  of  workmen's  compensation  in  the  United 
States.     A.  E.  Rev.,  5:  221-278.     1915. 

Leiserson,  W.  M.,  The  movement  for  public  labor  exchanges.   J.  P.  E., 
23:707-716.     1915. 

Pigou,  A.  C.,  Unemployment.     1914. 

Rubinow,  I.  M.,  The  problem  of  unemployment.    J.  P.  E.,  21:  313-331. 
1913. 

Rubinow,  I.  M.,  Subsidized  unemployment  insurance.     Ibid.,  412-431. 
1913. 

Sumner,  H.  L.,  and  Merritt,  E.  A.,  Child  labor  legislation   in   the 
United  States.     1915. 

United  States  Bureau   of  Labor  Statistics,  Bui.    159.     1915. 

QUESTIONS. 

1.  What  classes  of  economic  goods  or  services  are  regulated  by  law 
and  why? 

2.  Is  there  any  likeness  between  trade- unions  and  tariffs?     Between 
tariffs   and   factory   legislation? 

3.  What   reasons   are  given   in   justification   of   laws   closing  barber 
shops  on  Sundays? 

4.  May  a  person  owning  a  lot  on  a  residence  street  of  a  city  erect 
a  glue  factory  on  it? 

5.  What  have  you  noted  as  to  the  benefits  or  hardships  of  restrict- 
ing child  labor  in  factories? 

6.  In  what  kinds  of  social  legislation  is  the  federal  character  of  our 
government  a  serious  bar  to  experimentation?     Show  clearly  the  rea- 
sons why. 

7.  If  population  became  stationary,  neither  increasing  nor  decreasing 
in  numbers,  and  if  methods  were  discovered  which  would  render  possible 
the  production  of  the  same  amount  of  wealth  per  year  as  at  present 
with  only  half  the  force  of  laborers  employed,  and  if  the  average  labor 
day  were  not  shortened,  would  there  not  be  a  great  and  apparently 
permanent  lack  of  employment?     Discuss  thoroughly  and  give  reasons 
for  your  answer. 

8.  In  what  sense  is  the  "unemployment,"  so  manifest  in  a  period 
of  industrial  depression,  evidence  that  the  number  of  workers  is  "in 
excess  of  the  work  to  be  done"? 


44  MANUAL  OF  REFERENCES 

CHAPTER  23 
SOCIAL  INSURANCE 

REFERENCES. 

Adams  and  Sumner,  ch.  XII,  sees.  6-8. 

Baldwin,  F.  S.,  Old  age  pension  schemes:  a  criticism  and  a  program. 

Q.  J.  E.,  24:  713-742.     1909-1910. 
Commons,  ch.  XXV. 
*Commons  and  Andrews,  ch.  VIII. 
Foerster,    R.    F.,    The    British    national    insurance    act.      Q.    J.    E., 

26:275-312.     1911-1912. 
Frankel,   L.   K.,   and   Dawson,   M.   M.,    Workingmen's    insurance    in 

Europe.     1910. 

Henderson,  (7.  R.,  Industrial  insurance  in  the  United  States.     1909. 
Lewis,  F.  W.,  State  insurance.     1909. 
National  Civic  Federation,  Social  Insurance  Department,  Report  of 

the  committee  on  preliminary  foreign  inquiry.     1915. 
Rulinow,  I.  M .,  Standards  of  sickness  insurance.     J.  P.  E.,  23 :  221- 

251,  327-364,  437-464.     1915. 

United  States  Bureau  of  Labor,  Annual  reports,  1908,  1909. 
Warren,  B.  S.,  and  Sydenstricker,  Edgar,  Health  insurance.     1916. 

QUESTIONS. 

1.  Are  industrial   accidents  more   frequent  in   low  paid  or  in  high 
paid  occupations? 

2.  Suggest   advantages    and    disadvantages    of    a   general    system    of 
compulsory   industrial   insurance  for   old   age,  sickness   and  accidents. 
What  are  the   essential  differences  between   these  three  forms  of  in- 
surance ? 

3.  Show   to  what  extent   a   system   of   workingmen's   insurance   has 
been  developed  in  one  of  the  following  countries:     Germany,  France, 
Italy,    England.     In   the   development   of   a   general   system   of   work- 
ingmen's insurance  in  the  U.  S.,  which  one  of  the  above  forms  will 
probably  first  come  in?     For  what  reasons  has  a  system  of  this  kind 
not  been  developed  in  the  U.  S.  ?   Henderson,  C.  R.,  Industrial  insurance. 


CHAPTER  24 
POPULATION   AND   IMMIGRATION 

REFERENCES. 

* Adams  and  Sumner,  ch.  III. 

* Commons  and  Andrews,  ch.  II,  sec.  4. 


AND  EXERCISES  IN  ECONOMICS  45 

Fairchild,  H.  P.,  Immigration.     1913. 

The  standard  of  living — up  or  down?    A.  E.  Rev.,  6:  9-25.     1916. 
Fetter,    F.    A.,    Population    or    prosperity.      A.    E.    Rev.,    3  (no.    1, 

supp.)  :  5-19.      1913.      (Presidential   address   before  the   American. 

Economic  Association,   1912,  much  of  which  is  incorporated  with 

chap.  24  in  the  text.) 
Goldenweiser,  E.  A.,  Walker's  theory  of  immigration.     Am.  J.  Soc., 

18:342-351.     1912-1913. 

Hall,  P.  F.,  The  recent  history  of  immigration  and  immigration  re- 
striction.   J.  P.  E.,  21 :  735-751.     1913. 
*Hamilton,  Readings,  384-386,  392-395. 
Husband,  W.  W.,  The  significance  of  emigration.   A.  E.  Rev.,  2  (no.  1, 

supp.)  :  79-85.     1912.    Round  table  discussion  of  above,  86-88. 
Jenks,  J.  W.,  and  Lauck,  W.  J.,  The  immigration  problem.     1912. 
Lauck,   W.   J.,   The  vanishing   American   wage-earner.      Atlan.   Mo., 

110:  691-696.     1912. 
* Materials,  146-156. 
Mayo-Smith,    Richmond,    Statistics    and    economics.      1899.      Bk.    I, 

ch.  V. 
Mayo-Smith,  Richmond,  Statistics  and  sociology.   1895.     Bk.  I,  chs. 

V-VII. 
Millis,    H.    A.,    Some    economic    aspects    of    Japanese    immigration. 

A.  E.  Rev.,  5:  787-804.     1915. 
Page,  T.  W.,  The  distribution  of  immigrants  in  the  United   States 

before  1870.     J.  P.  E.,  20:  676-694.     1912. 
Page,   T.   W.,   Some   economic   aspects   of   immigration   before    1870. 

Ibid.,  20:1011-1028;   21:34-55.     1912,  1913. 
Roberts,  Peter,  The  new  immigration.     1912. 
Ross,  E.  A.,  The  old  world  in  the  new.     1914. 
* Source  Book,  187-198.     (Extract  from  Jenks  and  Lauck.) 
Warne,  F.  J.,  The  tide  of  immigration.     1916. 

QUESTIONS. 

1.  Tabulate  and  chart  the  changes  that  have  taken   place  in  our 
immigration   in   regard   to    (1)    amount,    (2)    character.     What   prob- 
lems are  presented  by  these  facts?     Stat.  Abst. 

2.  Explain  the  terms  "the  new  immigration"  and  "the  old  immigra- 
tion," and  give  the  important  statistical  facts  regarding  them. 

3.  Show  the  application  of  the  doctrine  of  population  to  the  present 
problem  of  immigration  and  wages  in  America. 

4.  Do  the  figures  on  immigration  show  anything  as  to  the  need  of 
legislation  restricting  immigration? 


46  MANUAL  OF  REFERENCES 

5.  What  has   been   the   effect  of   the   recent   immigration   into   the 
United  States  upon  the  use  of  machinery? 

6.  Apply  the  theory  of  wages  to  explain  the  effect  of  present  im- 
migration on  the  wages  of  unskilled  or  slightly  skilled  workers. 

7.  If  the  supply  of  labor  of  any  class  were  to  be  decreased  ten  per 
cent.,  would  wages  rise  in  like  proportion? 

8.  Is  immigration  now  adding  to  the  general  welfare  in  the  United 
States?      State   the   facts   and   general   economic    principles   on   which 
you  base  your  answer. 

9.  If  there  is  an  immigration  of  half  a  million  workers  annually 
into  a  country  for  a  period  of  ten  years — during  which  no  new  natural 
resources  are  made  available,  would  wages  in  that  country  be  affected? 
If  so,  of  what  classes  of  workers?     What  would  be  the  effect  on  the 
amount  of  income  received  by  land  owners? 

10.  Explain  how  the  general  principles  of  price-determination  hold 
in  the  determination  of  wages.     Show  how  these  principles  apply  when 
there    is    extensive    employment   of    southern    and    eastern    Europeans. 
(See  Source  Book.) 

11.  If   in   a  given   labor   market   the   number   of   laborers   increases 
while  the  number  and  technical  efficiency  of  indirect  agents  remains 
unchanged,   what  change,   if   any,   will   result  in  the  average   rate  of 
wages?  What  change,  if  any,  will  there  be  in  the  return  to  the  indirect 
agents  ? 

12.  Is   common,   unskilled   labor   "scarce"    (in   any   reasonable   sense 
of  the  word)   in  China?  in  the  United  States? 


CHAPTER  25 

AGRICULTURAL  AND  RURAL  POPULATION 

I 

REFERENCES. 

Carver,  T.  N.,  Selected  readings  in  rural  economics.     1916. 
Carver,  T.  N.,  The  work  of  rural  organization.    J.  P.  E.,  22:  821-844. 
1914. 

Coulter,  J.  L.,  Agricultural  development  in  the  United  States,  1900- 

1910.  Q.  J.  E.,  27:  1-26.     1912-1913. 
Hibbard,   B.   H.,   Tenancy    in   the   north    central    states.      Q.    J.    E., 

25:710-729.     1910-1911. 
Hibbard,  B.  H.,  Tenancy  in   the   north   Atlantic   states.     Q.   J.   E., 

26:  105-117.     1911-1912. 


AND  EXERCISES  IN  ECONOMICS  47 

Hibbard,  B.  H.,  Tenancy  in  the  western  states.    Q.  J.  E.,  26:  363-376. 

1911-1912. 
Hibbard,  H.  E.,  Tenancy  in  the  southern  states.    Q.  J.  E.,  27:  482-496. 

1912-1913. 
Hoagland,   H.   E.,    The   movement    of   rural   population    in    Illinois. 

J.  P.  E.,  20:  913-927.     1912. 
Nourse,  E.  G.,  Agricultural  economics.     1916.      (A  large  volume  of 

readings,  well  selected  and  edited.) 
Round  table  discussion.     The  decline  of  the  rural  population.     A.  E. 

Rev.,  2  (no.   1,  supp)  :  51,  52.     1912. 
Round  table  discussion.    Rural  conditions  in  the  south.     Ibid.,  48-50. 

1912. 

Taylor,  H.  C.,  Agricultural  economics.     1905. 
Vogt,   P.   L.,   The   farmer's   labor    income.     A.    E.   Rev.,   6:  808-822. 

1916. 

QUESTIONS. 

1.  Cite  any  instances  you  have  noted  of  local  changes  of  population 
distribution  as  between  country  and  city.     What  are  the  chief  facts 
of  interest  in  these  cases?     What  forces  can  you  assign  as  causes  of 
the  changes?     Has  agricultural  activity  been  accelerated  or  retarded? 
Has  it  received  a  set-back? 

2.  A  wealthy  metropolitan  banker  purchases  a  large  country  estate 
in   a   section   in  which  farming  is  practically  on   a   subsistence  basis 
and  in  which  in  recent  years  many  farms  have  been  abandoned.     He 
applies  labor  and  materials  lavishly  to  the  soil,  sparing  no  expendi- 
tures for   purposes  which   will   assist   in   the   production   of   crops   of 
the  best  quality.     Under  what  conditions  can  this  be  profitably  done? 
What  will  be  the  probable  effect  on  local  agriculture,    (a)    if  the  en- 
tire product  of  the  estate  is  consumed  upon  it?    (b)    if  a  substantial 
part   of   the    product   is    marketed    in    competition    with    that    of   the 
local  farmers?    What  changes  are  likely  to  occur  with  reference  to  the 
occupation  of  the  local  population?     With  reference  to  its  migration? 

3.  Why  is  it  that  immigrants  are  now  taking  up  the  farms  of  New 
England  which  have,  in  some  cases  for  years,  been  abandoned  by  native 
farmers?     Is   the   fact  that   they   are   doing   so    an   argument   for   or 
against  the  restriction  of  immigration? 

4.  What  is  the  general  tendency  of  immigrants  in  the  matter  of  set- 
tlement in  urban  and  rural  communities? 

5.  If  it  is  true  that  the  relative  decline  of  the  agricultural  popula- 
tion of  the  United  States  can  be  explained  by  the  operation  of  purely 
economic  forces,  on  what  grounds  is  there  justification  for  complaint 
as  to  the  evils  of  concentration  of  population  in  cities? 


48  MANUAL  OF  REFERENCES 

CHAPTER  26 
PROBLEMS  OF  AGRICULTURAL  ECONOMICS 

REFERENCES. 

Carver,  T.  N.,  Selected  readings  in  rural  economics.     1916. 

Coulter,  J.  L.,  Marketing  of  agricultural  lands  in  Minnesota  and 
North  Dakota.  A.  E.  Rev.,  2:282-301.  1912. 

Goldenweiser,  E.  A.,  The  farmer's  income.  A.  E.  Rev.,  6:  42-48. 
1916. 

Huebner,  G.  G,,  Agricultural  commerce:  the  organization  of  Ameri- 
can commerce  in  agricultural  commodities.  1915. 

International  Institute  of  Agricultural  Statistics  Year  Book.  Mono- 
graphs on  agricultural  cooperation  in  various  countries.  1916. 

Kemmerer,  E.  W.,  Agricultural  credit  in  the  United  States.  A.  E. 
Rev.,  2:  852-872. 

*Materials,  407,  408,  409. 

Metcalf,  R.,  and  Black,  C.  G.,  Rural  credit  cooperation,  and  agri- 
cultural organization  in  Europe.  1915. 

Olmsted,  V.  H.,  The  purchasing  power  of  farm  products.  United 
States  Dept.  of  Agric.,  Report,  1912. 

*Phillips,  ch.  XXVII.     On  agricultural  credit. 

Powell,  F.  W.,  Cooperative  marketing  of  California  fresh  fruit. 
Q.  J.  E.,  24:  392-418.  1909-1910. 

Putnam,  G.  E.,  Agricultural  credit  legislation  and  the  tenancy  prob- 
lem. A.  E.  Rev.,  5:  805-815.  1915. 

Putnam,  G.  E.,  Farm  credit  in  Kansas.     Ibid.,  27-37.     1915. 

Putnam,  G.  E.,  The  federal  rural  credit  bill.  Ibid.,  6:  770-789. 
1916. 

Shaw,  A.  W.,  Some  problems  in  market  distribution.  Q.  J.  E., 
26:703-765.  1911-1912. 

*Source  Book,  34-47,  48-57,  75-80,  81-90. 

Warren,  G.  F.,  Farm  management.  1913.  (Treats  primarily  the 
problem  of  the  individual  farm,  but  also  many  of  the  broader 
economic  questions.) 

Weld,  L.  D.  H.,  The  marketing  of  farm  products.     1916. 

QUESTIONS. 

1.  Why  has  the  corporate  form  of  business  organizations  not  been 
as    extensively    introduced    into    the    farming    industry    as    into    other 
industries  ? 

2.  Discuss  the  following  statements  quoted  from  an  article  on  the 


AND  EXERCISES  IN  ECONOMICS  49 

Federal  Farm  Loan  Act  of  1916.  "There  was  no  necessity  for  any 
kind  of  federal  legislation  affecting  the  land  credit  problem  of  land- 
owners. .  .  .  There  is,  however,  the  more  pressing  problem  ...  of 
making  the  conditions  of  country  life  more  attractive  to  the  younger 
generation  of  farmers.  In  accomplishing  this  end  some  form  of  land 
purchase  legislation  is  needed."  Amer.  Econ.  Rev.,  6:  789.  1916. 

3.  How  do  urban  and  rural  districts  differ  in  their  preference  for 
and  use  of  different  kinds  of  bank  credit. 


CHAPTER  27 
THE  RAILROAD  PROBLEM 

REFERENCES. 

Brown,  H.  Cr.,  The  competition  of  transportation  companies.  A.  E. 
Rev.,  4:  771-792.  1914. 

Brown,  H.  G.,  Transportation  rates  and  their  regulation.     1916. 

Clark,  J.  M.,  Some  neglected  phases  of  rate  regulation.  A.  E.  Rev., 
4:  565-574.  1914. 

Dixon,  F.  H.,  The  Mann-Elkins  Act,  amending  the  act  to  regulate 
commerce.  Q.  J.  E.,  24:  593-633.  1909-1910. 

Dunn,  8.  0.,  Railway  discrimination.    J.  P.  E.,  20:  437-461.     1912. 

Gephart,  W.  F.,  The  place  of  the  canal  in  a  national  system  of  trans- 
portation. A.  E.  Assn.  Bui.,  4th  ser.,  1  (no  2)  :  188-196.  1911. 
Round  table  discussion,  197-203. 

Hadley,  A.  T.,  Railroad  transportation.     1884. 

Hammond,  M.  B.,  Railway  rate  theories  of  the  interstate  commerce 
commission.  Q.  J.  E.,  25:  1-66,  279-336,  471-538.  1909-1910. 

Johnson,  E.  R.,  American  railway  transportation.    3d  ed.,  1908. 

Johnson,  E.  R.,  Inland  waterway  policy.  A.  E.  Assn.  Bui.,  4th  ser., 
1:  166-174.  1911. 

Johnson,  E.  R.,  The  principles  of  governmental  regulation  of  rail- 
ways. P.  S.  Q.,  15:37-49.  1900. 

McFall,  R.  J.,  Railway  monopoly  and  rate  regulation.     1916. 

Materials,  627,  628. 

Meyer,  B.  H.,  Certain  considerations  in  railway  rate  making.  A.  E. 
Rev.,  4  (no.  1,  supp.)  :  69-80.  1914.  Round  table  discussion  of 
above,  81-100. 

Prouty,  C.  A.,  Railway  discriminations  and  industrial  combinations. 
A.  A.  A.,  15:  41-50.  1900. 

Ripley,  W.  Z.,   (Ed.),  Railway  problems.  1907. 


50  MANUAL  OF  REFERENCES 

Ripley,  W.  Z.,  Railroads:  rates  and  regulation.    1912. 

Ripley,   W.   Z.,  Railroad   overcapitalization.     Q.   J.   E.,   28 :  601-629. 

1913-1914. 

Ripley,  W.  Z.,  Railroads:    finance  and  organization.     1915. 
•Source  Book,  361-367,  368-378,  379-382. 

QUESTIONS. 

1.  Why  is  transportation  a  greater  problem  in  the  United  States 
than  in  Europe? 

2.  Show  in  what  way  natural  waterways  have  determined  the  loca- 
tion of  leading  cities  in  America. 

3.  Give  examples  of  cities  whose  growth  has  been  caused  by  rail- 
roads. 

4.  Upon   what   considerations   are   commodities  classified   for    ship- 
ment   by    railroads?      Is    classification    unfair    discrimination?      Illus- 
trate by  an  example. 

5.  What  classes  of  interests  are  affected  by  increasing  the  minimum 
weight    for    carloads?      Explain    in    each    case    whether    the    effect    is 
favorable  or  unfavorable  and  the  reasons  therefor. 

6.  Does  cost  of  service  have  anything  to  do  with  the  rates  charged 
by  railroads? 

7.  Give  an   example   of   a   blanket   rate  territory   and   the  reasons 
therefor. 

8.  What    is   the    "long    and   short    haul"    clause   of   the    Interstate 
Commerce  Act?     Explain  why  railroads  make  rates  which  contravene 
the  terms  of  this  clause,  and  why  the  government  should  forbid  the 
railroads  to  make  such  rates. 

9.  A  railroad  connecting  two  competitive  points  charges  one-fourth 
of  a  cent  per  ton  mile  on  grain  shipments  from  its  inland  terminus, 
while  it  charges  one  cent  per  ton  mile  on  grain  shipments  from  non- 
competitive  territory.     What  considerations  have  probably  led  to  the 
establishment  of  the  above  rates? 

Might  not  the  railroad  increase  its  net  revenue  by  raising  the  rate 
on  through  traffic  to  one-half  cent  per  ton  mile  and  lowering  the  local 
rate  to  three-fourths  of  a  cent  per  ton  mile? 

10.  The  rate  on  corn  in  carload  lots  from  Omaha,  Neb.  to  Newport 
News,  Va.  is  10  cents  per  hundred  pounds.     From  the  Omaha  region 
there   are   competing  carriers  to   the   Gulf   and   other   Atlantic   ports. 
The  rate  on  corn  in  carload  lots  from  points  in  Virginia  to  Newport 
News  over  the  same  route  is  12  cents  per  hundred  pounds.     Could  not 
the  local  rates  be  lowered  if  the  carriers  advanced  the  rates  on  the 
long-distance  haul? 


AND  EXERCISES  IN  ECONOMICS  51 

11.  What  cases  have  you  seen  where  the  railroads  impose  unjustly 
on  the  public? 

12.  Give   instances  you   have   seen   or   heard  of  where  two  shippers 
paid  different  rates  for  the  same  service. 

13.  Do  you  know  any  large  cities  that  are  more  favorable  shipping 
points  than  neighboring  towns? 

14.  What  legal  rights  do  the  builders  of  a  railroad  have  that  are 
not  enjoyed  by  all  citizens? 

15.  Can  you  see  any  clear  distinction  between  the  public  nature  of 
a  railroad  and  that  of  a  horse  and   carriage  ? 

16.  What  harm  can  there  be  in  the  acceptance  of  passes  by  judges, 
legislators,  and  other  public  officials? 

17.  Ought  the  law  prohibit  the  sale  of  tickets  by  "scalpers"? 

18.  If  your  neighbor  rides  on  a  pass  and  you  pay  your  fare,  are 
you  helping  to  pay  for  his  ride? 

19.  Why  should  preachers  get  half-fare  rates? 

20.  What  are  the  chief  reasons  for  the  governmental  regulation  of 
railways  ? 

21.  Why  does  the  question  of  the  control  of  the  railways  in  the  in- 
terest of  the  public  present  especial  difficulties  in  America? 


CHAPTER  28 
THE  PROBLEM  OF  INDUSTRIAL  MONOPOLY 

REFERENCES. 

Bolen,  G.  L.,  Plain  facts  as  to  the  trusts  and  the  tariff.     1902. 

Collier,  W.  M.,  The  trusts.     1900. 

Cotter,  A.,  The   authentic  history   of  the  United  States   Steel   Cor- 
poration.    1916. 

Hobson,    J.    A.,    The    evolution    of    modern    capitalism.      Ed.,    1912. 
Ch.  V. 

Jones,  Eliot,  The  anthracite  coal  combination  in  the  United  States. 
1914. 

King,  W.  /.,  The  wealth  and  income  of  the  people  of  the  United 
States.     1915. 

Meade,  E.  8.,  The  economics  of  combination.     J.  P.  E.,  20:  358-372. 
1912. 

Trust  finance.     1903. 

Montague,  G.  H.,  Trusts  of  to-day.     1904. 


52  MANUAL  OF  REFERENCES 

Ripley,    W.   Z.,   Industrial    concentration    as    shown    by    the   census. 

Q.  J.  E.,  21:651-658.     1906-1907. 

(Ed.),  Trusts,  pools  and  corporations.     Ed.,   1916. 
*  Source  Book,  255-264.      (Extract  from  United  States  Commissioner 

of  Corporations,  Report  on  the  transportation  of  petroleum.) 
Stevens,  W.  S.,  Classification  of  pools  and  associations.     A.  E.  Rev., 

3:545-575.     1913. 

Stevens,  W.  S.,    (Ed.),  Industrial  combinations  and  trusts.    1913. 
Stevens,   W.   S.,   A   group    of   trusts    and    combinations.      Q.    J.    E., 

26:  593-643.     1911-1912. 
Stevens,    W.    S.,    The    powder    trust,     1872-1912.       Ibid.,    444-481. 

1911-1912. 

United  States  Commissioner  of  Corporations,  Report  on  the  trans- 
portation of  petroleum.     1906. 
Willoughby,  W.  P.,  The  integration  of  industry  in  the  United  States. 

Q.  J.  E.,  16:  94-115.     1901-1902. 

QUESTIONS. 

1.  What  large  trusts  have  recently  been  formed? 

2.  State   the   motives    for    forming   trusts,    separating   those    which 
are  socially  beneficial  and  those  which  are  anti-social. 

3.  Enumerate  the  advantages  possessed  by  a  "trust"  over  a  small 
competitor,  and  indicate  which  of  these  are  the  results  of  large  scale 
production  and  which  are  due  to  the  possession  of  monopoly  power. 

4.  Are  there  any  conditions  under  which  a  combination  would  be 
a  more  economical  unit  of  production  and  distribution  than  a  single 
plant  large  enough  to  secure  all  advantages  to  be  obtained  from  mere 
quantity  of  output?     If  so,  state  them  clearly. 

5.  Explain   carefully   the   causes   and   limits   of  the   advantages   of 
large  production.     Give  three  examples  of  industries  in  which  the  ad- 
vantages are  seen. 

6.  Have  you  observed  the  growth  of  any  local  industry  from  a  small 
beginning  to  large  proportions?     If  so,  how  do  you  account  for  it? 

7.  What  is  the  largest  manufacturing  establishment  in  your  home 
town?     Would  a  number  of  smaller  establishments  of  the  same  sort 
and  with  the  same  aggregate  capacity  succeed  as  well?     Why? 

8.  What  relation  has  improved  transportation  and  other  means  of 
communication  to  trusts? 

9.  What   are  the  chief  methods   by  which   trusts   or   combinations 
have  sought  to  make  economies  in  management? 

10.  Describe  the  characteristic  features  of  the  pool,  the  trust  and  the 
holding  company. 


AND  EXERCISES  IN  ECONOMICS  53 

11.  Describe  any  agreement  of  which  you  know,  made  between  mer- 
chants  or   manufacturers   for   the  purpose  of   regulating  prices.      Did 
prices  go  up  or  down  as  a  result? 

12.  What  is  a  simple  price  agreement?     How  does  it  differ  from  a 
pool?     Is  there  any  difference  in  the  matter  of  legality?     Reasons. 

13.  What  are  the  limits  to  the  price-fixing  and  profit-earning  powers 
of   monopolies?     Are  there   any   other   conditions  which   will  tend   to 
check  the  indefinite  growth  of  combinations? 

14.  Explain  and  illustrate  by  a  concrete  example  the  circumstances 
relating  to  cost  of  production  which  tend  to  make  a  monopoly  price 
lower  than  the  previous  competitive  price  for   the  same  article.     No 
reference  is  here  intended  to  local  or  temporary  cuts  in  price  by  monop- 
olies which  are  intent  by  such  means  on  capturing  a  local  market. 

15.  If  all  trade  is  exchange,  do  not  the  members  of  a  trust  reduce 
their  income  when  they  raise  the  price  of  their  products  by  artificial 
agreement  ? 

16.  Five  plants  engaged  in  the  production  of  a  given  article  in  dif- 
ferent parts  of  the  United  States  are  combined  under  the  ownership 
of  a  single  corporation  formed  for  this  purpose.     Before  the  combina- 
tion these  five  plants  produced  75  per  cent,  of  the  total  output  of  the 
article   in   question,   each   producing   approximately   15   per   cent.;    the 
remaining  75  per  cent,  was  produced  by  seven  plants,  no  one  of  these 
turning  out  more  than  5  per  cent,  of  the  total  output.     Each  of  the 
first  five  plants  was  large  enough  to  secure  all  known   economies  in 
the  costs  of  transforming  the  raw  material  into  the  physically  finished 
product,  and   each  was  running  to  its   full  capacity.     The  aggregate 
net    earnings   of   the    five    plants   were   $1,000,000    a   year.      The    cost 
of  reproducing  these  five  is  $14,000,000.     The  new  corporation  issues 
and  pays  to  the  owners  of  the  properties  taken  over   $10,000,000  in 
5  per   cent,   first  mortgage  bonds,   $6,000,000   in   cumulative  preferred 
stock,  and  $8,000,000  in  common  stock. 

What  will  determine  whether  this  combination  possesses  monopoly 
power  ? 

Is  the  corporation  overcapitalized?  If  so,  to  what  extent?  State 
clearly  what  you  mean  by  overcapitalization? 

Is  it  probable  that  the  earnings  of  the  new  corporation  will  be 
greater  than  the  aggregate  earnings  of  the  five  plants,  if  the  price  of 
the  product  is  not  increased?  If  so,  how  will  this  increase  be  gained? 

If  there  is  an  increase  in  earnings,  how  will  the  price  of  each  of 
the  three  kinds  of  securities  of  the  corporation  be  affected? 

17.  Suppose  that  the  effective  demand  for  a  certain  kind  of  goods 


54  MANUAL  OF  REFERENCES 

in   the  country  as  a  whole  will   vary   in   the  following  manner   with 
the  price  changes  indicated: 

$1.00  1,000,000  units 

1.10  900,000  units 

1.20  800,000  units 

1.30  700,000  units 

1.40  600,000  units 

1.50  500,000  units 

1.60  400,000  units 

1.70  300,000  units 

1.80  200,000  units 

There  are  ten  companies  each  producing  100,000  units  at  a  cost 
of  90  cents  (including  all  costs  but  an  allowance  for  dividends  on 
investment)  this  giving  just  enough  of  a  margin  to  each  company 
to  cause  it  to  continue  in  the  industry.  What  immediate  effect  on 
prices  could  a  combination  consisting  of  six  firms  have,  assuming 
that  the  cost  per  unit  of  product  and  that  the  output  of  the  inde- 
pendents remain  unchanged?  Show  for  each  of  the  prices  indicated 
what  the  amount  of  the  margin  made  by  the  four  independent  com- 
petitors (altogether)  and  by  the  combination  would  be.  What  less 
immediate  effects  would  be  likely  to  follow,  and  why? 

18.  Is  granting  patents  an  interference  with  trade  similar  to  tariffs? 

19.  Is    it   right  that   the   lucky    inventor   of    a   popular   toy    should 
make  $100  a  day  from  it? 

20.  Is  it  right  that  an  inventor   should  by  patent  laws  be  able  to 
keep  the  profits  of  his  business  high? 


CHAPTER  29 
PUBLIC  POLICY  IN  RESPECT  TO  MONOPOLY 

REFERENCES. 

Anderson,  B.  M.,  Jr.,  Competition  versus  monopoly  the  issue  of  the 

campaign.     Independent,  73:  997-1002.     1912. 
Bolen,  G.  L.,  Plain  facts  as  to  the  trusts  and  the  tariff.     1902. 
Brown,   W.  J.,  The  prevention  and  control  of  monopolies.      1915. 
Clark,  J.  B.,  The  problem  of  monopoly.     1904. 
Clark,  J.  B.,  and  J.  M.,  The  control  of  trusts.    Ed.,  1914. 
Clark,  J.   If.,   Rates    for    public    utilities.     A.    E.    Rev.,    1  :  473-487. 

1911. 
Collier,  W.  M.,  The  trusts.     1900. 


AND  EXERCISES  IN  ECONOMICS  55 

Dames,  J.  E.,  Trust  laws  and  unfair  competition.  1916. 

Durand,  E.  D.,  The  trust  problem.  1915.  See  also  Q.  J.  E., 
28:381-416,664-700.  1913-1914. 

Durand,  E.  D.,  The  trust  legislation  of  1914.  Q.  J.  E.,  29 :  72-97. 
1914-1915. 

Ely,  R.  T.,  Monopolies  and  trusts.     1900. 

Gray,  J.  H.,  The  control  of  public  service  corporations.  A.  E.  Rev., 
4  (no.  1,  supp.)  :  18-44.  1914.  Round  table  discussion  of  above, 
45-68. 

Hotchbiss,  W.  E.,  Recent  trust  decisions  and  business.  A.  E.  Rev., 
4  (no.  1,  supp.)  :  158-172.  1914.  Round  table  discussion  of  above, 
173-195. 

Jenks,  J.   W.,  The  trust  problem.     1900. 

Knauth,  0,  W.,  Capital  and  monopoly.     P.  S.  Q.,  31:  244-259.     1916. 

Knauth,  O..W.,  Competition  and  capital.     Ibid.,  30:  578-590.     1915. 

Knauttf,  0.  W.,  The  policy  of  the  United  States  toward  industrial 
monopoly.  1914. 

LeRossignol,  J.   E.,  Monopolies  past   and  present.     1900. 

Orth,  S.  P.  ( Ed. ) ,  Readings  on  the  relation  of  government  to  prop- 
erty and  industry.  1915. 

Ripley,  W.  Z.,    (Ed.),  Trusts,  pools  and  corporations.    Ed.,   1916. 

*Source  Book,  383-385.     The  Sherman  anti-trust  act. 

Stevens,  W.  #.,  The  Clayton  act.     A.  E.  Rev.,  5:  38-54.    1915. 
The  trade  commission  act.     Ibid.,  4:  840-855.     1914. 

United  States  Industrial  Commission,  Report.     1898-1901.     19  vols. 

Wright  C.  W.,  The  economics  of  governmental  price  regulation. 
A.  E.  Rev.,  3  (no.  1,  supp.)  :  126-131.  1913.  Round  table  dis- 
cussion of  this  paper  and  that  of  J.  M.  Clark,  132-142. 

Wyman,  Bruce,  Control  of  the  market.    1911. 

QUESTIONS. 

1.  What  is  the  trust  problem? 

2.  Does  the  public   consider   the  growth   of   trusts   to   be   good  or 
bad?     What  do  students  of  the  question  think  of  it? 

3.  Which  one  of  the  following  views   do  you  think  to  be  nearest 
the  truth  and  why?     (a)    The  trust  is  a  natural  and  inevitable  out- 
come of  modern  conditions  and  is  a  distinct  economic  gain,      (b)    The 
trust  is  a  result  of  special  privileges  and  corporate  abuses,      (c)    The 
trust  is  the  greatest  invention  of  this  or  any  other  age. 

4.  Would   it   be   a  good   thing  for   society   if   a  trust  made  great 
economies   in   production,    crowded    out   its    smaller    competitors,    and 
maintained   prices   just   where   they   were   before,   dividing   among   its 
shareholders  the  amounts  saved? 


56  MANUAL  OF  REFERENCES 

5.  How  would  the  effects  on  society  be  different  if  prices  were  re- 
duced by  better  organization  and  the  prevention  of  waste? 

6.  If   it   could  be   shown   that   trusts  have   lowered   prices,   should 
th.at  fact  exempt  them  from  all  interference  from  legislation  ? 

7.  Describe  briefly  the  "unfair  practices"  of  monopolistic  corpora- 
tions.    What  specific  features  of  the  recent  railroad  and  trust  legis- 
lation are  aimed  at  the  prevention  of  these  practices? 

8.  Is  it  good  public  policy  to  allow  a  trust  to  undersell  its  smaller 
competitor  in  one  district  while  it  keeps  up  its  prices  elsewere? 

9.  Are  most  positive  laws  intended  to  hinder  competition  or  make 
it  freer? 

10.  Copy  from  the  statutes  of  two  states  far  apart,  those  sections 
that    pertain    to    anti-trust    or    anti-monopoly    legislation.      Note    the 
general  nature  of  this  legislation,  special  features,  penalties  for  viola- 
tions, etc.,  and  discuss. 

11.  What   are   the  main   provisions   in   one   of   the    following:      (a) 
Sherman    Anti- Trust    Law,     (b)    Massachusetts    Business    Corporation 
Law,    (c)    The  New  Companies'  Acts,  England,    (d)    German  Company 
Law. 

12.  Abstract  and  discuss  the  Northern  Securities  decision.     Do  you 
see   any  arguments  to   be  advanced   for  pooling?     Do  you  think   the 
decision   effective   in    stopping   pooling?      Ripley    (Ed.),   Trusts,    pools 
and  combinations. 


CHAPTER  30 
PUBLIC  OWNERSHIP 

REFERENCES. 

Bemis,  E.  T^".,   (Ed.),  Municipal  monopolies.    1899. 

Brooks,  R.  C.,  Municipal  Affairs,  5:  1-346.  1901.  (An  exhaustive 
and  well-arranged  bibliography  on  all  aspects  of  municipal  prob- 
lems.) 

Dewsnup,  E.  R.,  The  attitude  of  the  state  toward  railways,  a  dis- 
cussion of  the  question  of  nationalization.  A.  E.  Assn.  Bui.,  4th 

Fairlie,    J.    A.,    Recent    extensions    of    municipal    functions    in    the 
ser.,  1,  no.  2:  175-187.     1911.      (Vol.  of  Papers  and  discussions.) 
United  States.     A.  A.  A.,  25:  299-310.     1905. 

Guyot,  Yves,  Where  and  why  public  ownership  has  failed.  Trans, 
by  H.  F.  Baker.  1914. 

Knapp,  M.  A.,  Government  ownership  of  railroads.  A.  A.  A., 
19:61-73.  1902. 


AND  EXERCISES  IN  ECONOMICS  57 

National  Civic  Federation,  Report  on  municipal  and  private  opera- 
tion of  public  utilities.  1907.  3  vols.  (A  monumental  study  by 
an  American  delegation,  which  visited  many  cities  of  Europe  and 
America;  favorable,  in  the  main,  to  extension  of  municipal  owner- 
ship. ) 

Winchell,  B.  L.,  Drift  toward  government  ownership  of  railways. 
Atlan.  Mo.,  110:  747-758.  1912. 

QUESTIONS. 

1.  Does    every   government   enterprise    necessarily   narrow    the    field 
for  private  enterprise  and  diminish  the  amount  of  competition? 

2.  What   forms  of   state   activity   favor   survival   of  unfit   men   and 
bad  traits  of  character?     What  forms  help  the  fittest  to  survive? 

3.  What  are  municipal  franchises?     Where  are  they? 

4.  Why   does   the   public   consent   to   grant   patents   or   public   fran- 
chises ? 

5.  What  kinds  of  municipal  industries  have  you  seen  in  operation  ? 
How  successful  were  they? 

6.  What  are  the  main  arguments  for  and  against  the  city  owner- 
ship and  control  of  gas  and  waterworks?     What  troubles  arise  from 
city  politics? 

7.  Name   the    industries    that   are    owned    and   controlled    by   towns 
and  cities  of  which  you  have  a  personal  knowledge. 

Which   of   them   are   most   satisfactory   in   your   judgment?     Which 
the  least  so? 

8.  What    is   the   public   sentiment   in   your   home   community    as   to 
the  ownership  of  industries  by  the  town  or  city? 


CHAPTER  31 
SOME  ASPECTS  OF  SOCIALISM 

REFERENCES. 

Brooks,  J.  G.,  The  problem  of  syndicalism.  A.  E.  Rev.,  4  (no.  1, 
supp.)  :  115-130.  1914.  Round  table  discussion  of  above,  131-157. 

Clark,  J.  B.,  Social  justice  without  socialism.     1914. 

Ensor,  R.  C.  K.,  (Ed.),  Modern  socialism.  2d  ed.,  1907.  (Selec- 
tions from  socialistic  sources.) 

Gladden,  Washington,  Tools  and  the  man.  1893.  (One  example  of 
a  large  number  of  American  books  appealing  for  the  application 
of  Christian  ethics  to  social  questions.) 

Hillquit,  M.,  History  of  socialism  in  the  United  States.     1903. 


58  MANUAL  OF  REFERENCES 

Hillquit,  M.,  Socialism  in  theory  and  practice.     1909. 

Hinds,  W.  A.,  American  communities.  2d  ed.,  1908.  (Describes 
many  experiments,  all  failures;  by  a  sympathizer  with  socialism.) 

Kirkup,  T.,  Inquiry  into  socialism.  3d  ed.,  1907.  (A  sympathetic, 
but  not  a  partizan  statement.) 

Lockwood,  G.  B.,  The  New  Harmony  movement.     2d  ed.,  1907. 

Martin,  John,  An  attempt  to  define  socialism.  A.  E.  Assn.  Bui.,  4th 
ser.,  1  (no.  2)  :  347-354.  1911.  Round  table  discussion  of  above, 
355-367. 

Menger,  A.,  The  right  to  the  whole  produce  of  labor.  Trans.  1899. 
(Masterly  criticism.) 

Rae,  John,  Contemporary  socialism.  3d  ed.,  1901.  (Standard  work 
by  a  non-socialist.) 

Schaeffle,  A.,  The  quintessence  of  socialism.  Ed.,  1898.  (Exposi- 
tion by  a  non-socialist,  so  favorable  that  it  is  used  by  the  social- 
ists as  a  tract.) 

Spahr,  C.  B.,  Present  distribution  of  wealth  in  the  United  States. 
1896. 

Spargo,  John,  Socialism.     1906.      (Pro.) 

Walling,  W.  E.,  Socialism  as  it  is.     1912.      (Pro.) 

Walling,  W.  E.,  and  others,  The  socialism  of  to-day.  1916.  (A 
source  book.) 

Watkins,   G.   P.,  Growth  of  large  fortunes.     1907. 

Wells,  H.  G.,  New  worlds  for  old.  1908.  (An  appeal  for  juster 
distribution;  Fabian  school.) 

QUESTIONS. 

1.  In  the  last  analysis  is  there  anyone — retired  capitalist  or  un- 
skilled   day-worker — whose    title    to    the    real    income    he    receives    is 
derived  solely  from  the  property  he  owns,   or   solely   from  the   labor 
he  performs? 

2.  What  is  it  to  earn  a  living?     How  many  people  do  it? 

3.  If  capital  is  needed  in  production  why  is  the  question  of  justice 
raised  when  its  use  is  paid  for? 

4.  What  is  the  doctrine  of  economic  harmonies?     Give  three  exam- 
ples (distinct  in  kind)   in  modern  legislation  which  run  counter  to  this 
doctrine,  with  the  justificaton  for  each  of  these. 

5.  Define  charity.     Apply  the  general  principles  of  charity  to  free 
schools,  free  libraries,  and  free  clothing  to  school  children. 

6.  What  is  economic  freedom?     How  different  from  political   free- 
dom? 


AND  EXERCISES  IN  ECONOMICS  59 

7.  Is  custom  a  better  regulator  of  economic  action  than  competi- 
tion? 

8.  What  are  vested   rights?     Do   they  ever   stand   in   the   way   of 
progress  ?     Examples. 

9.  Distinguish   between   the  socialistic  and   the  competitive  princi- 
ples of  distribution. 

10.  What  classes  of  thinkers  are  most  inclined  to  take  up  socialism? 
(Classes  considered  socially,   industrially,  as  to  race,   as  to  economic 
and  historical  training.) 

11.  If  socialism  reduced  the  total  product,  would  it  still  be  desirable 
because  of  the  better  distribution? 

12.  What   effect  would   it   have   if  the   state   should   make   laborers 
work   for   unsuccesful   employers  at  lower  wages   than   for    successful 
ones  ?      Or    should   reduce   rents   for   the    less   capable   merchants   and 
manufacturers  ? 

13.  Is  there  any  rule  for  determining  the  limits  of  state  interfer- 
ence ? 

14.  If  you  had  the  power,  what  single  public  measure  that  you  be- 
lieve would  be  practicable  and  effective  would  you  put  on  the  statute 
books,  in  order  to  make  a  juster  division  of  the  social  income?     Give 
reasons. 

15.  The  wealth  of  the  United  States  increased  from  $7,000,000,000 
in  1850  to  $188,000,000,000  in  1912.    How  was  this  wealth  distributed 
according  to    (a)    the  socialistic  theory  of  value?    (b)    the  single  tax 
theory?    (c)    the  theory  of  value  under  competitive  conditions? 

16.  What  are  the  chief  ways  in  which  the  rule  of  competitive  value 
has  been  nullified  in  this  period. 

17.  Would  socialism  guarantee  steadiness  or  regularity  in  economic 
activity,    thus    eliminating    the    phenomena    of    economic    crises    and 
depressions? 

18.  In  what  way  does  taxation  now  shift  the  distribution  of  real  in- 
comes as  among  persons?     By  what  other  methods  and  in  what  degree 
could  such  taxation  be  extended? 


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WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.OO  ON  THE  SEVENTH  DAY 
OVERDUE. 


MAR  13  1941  M 

MAR  12  1941 

LD  21-100m-7,'39(402s) 

PH. 


376J3S 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


